Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized THE WORLD BANK GROUP AFRICA REGION MACROECONOMICS, TRADE AND INVESTMENT GLOBAL PRACTICE JUNE 2020 ISSUE 14 http://www.worldbank.org/tanzania/economicupdate ADDRESSING THE IMPACT OF COVID-19 With a Special Section on the Role of ICT TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION PAGE ii The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table of Contents Abbreviations and Acronyms..................................................................iv Acknowledgements..................................................................................vi Executive Summary.................................................................................. 1 Part One: The State of the Economy ...................................................... 8 1.1 The Economy Before COVID-19............................................................................................ 9 ........................................................ 19 1.2 COVID-19 Impact and the Medium-Term Outlook. Part Two: The Potential Of The Digital Economy................................ 26 2.1 Introduction............................................................................................................................37 2.2 Tanzania’s Digital Economy.................................................................................................39 2.3 The Digital Economy as an Engine of Growth.................................................................55 2.4 Recommendations................................................................................................................60 Statistical Annexes . ............................................................................... 62 References ............................................................................................... 79 PAGE i TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Boxes Box 1: Out of Africa? How the Pandemic is Affecting Tourism in Tanzania.................................................................... 21 Box 2: Building Confidence: The Role of Information in the Response to COVID-19....................................................30 Box 3: How Digital Technologies are Part of the Armory for Coronavirus Response................................................... 51 Figures Figure 1: Economic Growth, Tanzania and Comparators, 2013–18.....................................................................................9 Figure 2: Inflation, 2018-20, Percent...........................................................................................................................................10 .............................................................................................................11 Figure 3: Current Account Deficit, 2016–19, Percent. Figure 4: Growth in Exports and Imports, 2016–19, Percent...............................................................................................11 Figure 5: Official Gross Reserves and Foreign Inflows, 2016-19, US$................................................................................11 Figure 6: Nominal Exchange Rate, 2019–20, Percent ......................................................................................................... 12 Figure 7: Real Effective Exchange Rate, 2019–20, Percent.................................................................................................. 12 Figure 8: Lending Rates, 2019, Percent......................................................................................................................................13 Figure 9: Growth in M3 and Private Sector Credit, 2019, Percent......................................................................................13 Figure 10: Public Debt, 2016-19, Percent...................................................................................................................................15 Figure 11: New Firms Registering for Business, 2014–18......................................................................................................16 .................................... 18 Figure 12: Tanzania Poverty Trend Based on Tanzanian Poverty-Growth Elasticity, 2011-18. Figure 13: Tanzania Poverty Trend Simulation Using Average African Poverty-to-Growth Elasticity, 2011-18..................18 Figure 14: Household Consumption Growth 2011 -2018 by Welfare Percentile (Growth Incidence Curve)......... 18 Figure 15: Energy and Metal Prices, 2018-20..........................................................................................................................23 Figure 16: Real GDP Growth Forecast.......................................................................................................................................26 Figure 17: Number of Poor People in Tanzania, 2004-22, Millions....................................................................................28 Figure 18: Possible Sources of Recovery in 2021, Contribution to GDP Growth...........................................................35 Figure 19: Digital Economy Framework....................................................................................................................................40 Figure 20: Google Has Edge Points in Kenya and Uganda..................................................................................................42 Figure 21: Facebook Has CDNs in Zambia, Rwanda, Burundi, Uganda, and Kenya.....................................................42 ................................................................................................................................................................47 Figure 22: 3G Coverage. ................................................................................................................................................................47 Figure 23: 4G Coverage. Figure 24: Mobile Communications Market Shares, 2019..................................................................................................48 Figure 25: Smart Phone Ownership, Between Urban and Rural Areas, and Between Men and Women, By Income Quintile, 2017.......................................................................................................................................50 Figure 26: Mobile Phone Ownership, by Age Group, and Reasons for not Owning a Phone, 2017, Percent........50 PAGE ii The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 27: Trade per Capita Digitally Delivered, US$, 2017.................................................................................................59 Tables ...................................................................10 Table 1: Official Quarterly Real GDP, January-September, 2018-19, Percent. Table 2: Trade Balance, 2017-19.................................................................................................................................................. 12 Table 3: Fiscal Accounts, 2018/19-2019/20, Percent Of GDP.............................................................................................14 Table 4: Medium-Term Outlook, Annual Percent Change Unless Otherwise Indicated.............................................22 ...................................................................................................27 Table 5: Number Of People Working In The Sector, 2018. Table 6: Poverty Headcount In Selected Urban Areas, 2018-20, Percent........................................................................29 ....................................................................................................................33 Table 7: Possible Actions To Protect Livelihoods. Table 8: Components In Assessment Of The Digital Economy.........................................................................................38 Table 9: Weighted Prices For Internet Bandwidth, 2019 Q2, Us$......................................................................................41 Table 10: International Internet Bandwidth By Country (Mbit/S), 2015-19....................................................................41 .........................................43 Table 11: Population Within Reach Of Fiber Transmission Networks Compared, Percent. Table 12: Mobile Data Basket Prices Charged By Dominant Operators, 2019 Q4, Us$...............................................45 Table 13: Population Coverage In 2019, Percent.....................................................................................................................46 Table 14: Internet Users And Mobile Communications Subscribers, 2015-19...............................................................46 Table 15: Voice Traffic, 2014–19..................................................................................................................................................46 Table 16: Coverage Estimates Based On Cell Locations.......................................................................................................47 Table 17: Bank Accounts Or Credit Cards, Tanzanians 15 Years Or Older, 2017, Percent............................................49 Table 18: Mobile Money Statistics, 2014–19, Year end.........................................................................................................49 ............................................................52 Table 19: Tanzanians 15 Years Or Older, With A National Id Or Passport, 2017. Table 20: Digital Trade Legislation In Tanzania.......................................................................................................................54 Table 21: Reports On Increased Broadband Penetration And GDP Growth...................................................................55 Table 22: Social Media Use, People 15 And Older, By Country, 2017/18, Percent.........................................................56 Table 23: World Bank Ease Of Doing Business Rankings, 2019.........................................................................................58 PAGE iii Abbreviations and Acronyms BOT Bank of Tanzania CAD Current Account Deficit CAGR Compound Annual Growth Rate CDN Content Distribution Networks CITCC China International Telecommunication Construction Corporation COVID-19 Corona Virus Disease 2019 DAI Digital Adoption Index DFID United Kingdom Department for International Development DP Development Partner EAC East African Community EMDEs Emerging Markets and Developing Economies EU European Union FDI Foreign Direct Investment FSAL Financial Sustainability Assessment Program GDP Gross Domestic Product GDPR General Data Protection Regulation GSMA Global System for Mobile Communication Association HBS Household Budget Survey ICT Information and Communications Technology IDI ICT Development Index IMF International Monetary Fund IP Internet Protocol ITU International Telecommunication Union KPI Key Performance Indicators MoFP Ministry of Finance and Planning MSME Micro, Small, and Medium Enterprises NBS National Bureau of Statistics NICTBB National ICT Broad Band NPLs Nonperforming Loans NSRC Network Startup Resource Center PAGE iv TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION OTT “Over-the-top” Service Providers Pp Percentage points PPPs Public-Private Partnerships PSSN Productive Social Safety Net RoW Rights of Way SADC Southern Africa Development Community SGR Standard Gauge Railway SME Small and Medium-sized Enterprises SSA Sub-Saharan Africa TARURA Tanzania Rural and Urban Roads Agency TCCL Tanzania Telecommunication Company Ltd TCRA Tanzania Communication Regulatory Authority TRA Tanzania Revenue Authority TZS Tanzanian Shilling UNCTAD United Nations Conference on Trade and Development URT United Republic of Tanzania US$ United States Dollar USA United States of America VAT Value Added Tax WB World Bank WDI World Development Indicators WHO World Health Organization PAGE v The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Acknowledgements The fourteenth edition of the Mara Warwick (Country Director Tanzania Economic Update was for Tanzania, Malawi, Zambia and prepared by a joint World Bank team Zimbabwe), Abebe Adugna (Practice of the Macroeconomics, Trade and Manager for MTI, Africa), Michel Rogy Investment (MTI), Poverty (GPV), (Practice Manager for IDD, Africa), Finance, Competition and Innovation Preeti Arora (Operations Manager), (FCI), Health (GHN), and Digital Casey Torgusson and Jerome Bezzina Development (IDD) Global Practices. (IDD Africa) provided guidance and The team included Tim Kelly, Steve leadership throughout the preparation Esselaar, Miguel Saldarriaga, Robertus of the report. Swinkels, Freeha Fatima, Loy Nabeta, and Emmanuel Mungunasi. The team Anne Grant provided editorial appreciates inputs from Inaam Ul assistance, while Faustina Chande, Haq, Gilead Teri, Solomon Baregu, and Diana Mwaipopo, Lydie Ahodehou, and Neema Mwingu. Richard Record and Abdul Muhile managed design and Naomi Halewood also provided useful printing. insights. William Battaile provided overall supervision. PAGE vi TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Executive Summary State of the economy: In 2019 Every economy in Africa is being growth in Tanzania’s economy was hit hard in 2020 by the COVID-19 again solid, but this year COVID-19 pandemic, though expected country- is expected to cut GDP growth at specific magnitudes remain highly least in half and increase poverty. uncertain. As of May 27 2020, more than 80,000 cases and 1,900 deaths With external conditions benign in were recorded in the region. The rate 2019, Tanzania’s economic growth of transmission in Africa seems to be remained solid. According to official slower than in Europe and the United data, GDP growth through the first States. Nonetheless, implementing three quarters of 2019 was 6.9 percent, containment measures is difficult in close to the 2018 official rate of 7.0 Africa due to crowded urban conditions percent. Leading the way were mining, and a large informal economy. The construction, and transport services. spread of COVID-19 has affected the Inflation through the year was low and labor market, production capacity, stable, the balance of payments was and productivity. Moreover, the healthy, and the current account deficit pandemic is affecting low-income (CAD) narrowed. Headline inflation was countries asymmetrically, hurting 3.8 percent by year end, well below the disproportionately the countries with authorities’ ceiling of 5 percent. Higher the poorest health infrastructure. exports of gold and manufactured goods helped improve the CAD from Economic costs are already being felt 3.8 percent of GDP in 2018 to 3.0 in Tanzania and even with additional percent. Imports rose more slowly, policy actions to strengthen the with intermediate goods recording the health response and mitigate the highest growth as oil imports went economic effects, 2020 GDP growth up. The CAD was funded primarily by will likely slow sharply. Tourism has external borrowing. At year end, official halted, and exports of manufacturing gross reserves reached US$5.6 billion, and agricultural goods have slumped. enough to cover 6.4 months of imports In combination with direct labor market of goods and services and comfortably disruptions from the pandemic, this has above the government’s goal of 4 caused a severe dampening of private months coverage. domestic demand and deterioration PAGE 1 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region of domestic business conditions. growth and constituted more than Falling public revenues confirms the 26 percent of total exports. The main broad dampening across the domestic tourism operators in the country are economy. Point estimates for 2020 forecasting revenue contractions of 80 growth are highly uncertain and external percent or more this year, and only a demand and domestic business mild recovery next year, conditional on conditions over the coming months how well global demand rebounds. For are very unclear. Current World Bank Tanzanian exports that are part of global staff estimates based on assumptions value chains, the decline in the volume of strengthened government action of sales will reduce demand for imported on containing the pandemic and raw materials and intermediate goods. mitigating the economic impact, as well The volume of exports will also shrink as improving external conditions, show as disruption in value chains pushes up real GDP growth slowing to 2.5 percent the costs of inputs and transportation, in 2020, with substantial downside risk. delaying import delivery times and thus Moreover, our simulations using the the quantity of imports that exporters 2018 Household Budget Survey suggest use as raw materials. Therefore, exports an additional 500,000 Tanzanians could are expected to decline by 10.0 percent, fall below the poverty line, particularly and imports by 1.5 percent. However, those in urban settings relying on Tanzania will benefit from lower oil self-employment and informal/micro prices and higher gold prices, and these enterprises. The fiscal deficit and current price effects, even if the volumes do not account deficit are also both expected change, will alleviate the deterioration to widen. Even though our baseline of Tanzania’s external position arising scenario assumes that the impact of from lower exports. Overall, we expect coronavirus will become less severe a deterioration of the current account later in 2020, there is a serious risk of deficit of 0.9 percentage points of GDP. long-lasting negative spillovers on labor productivity. Domestic business conditions are expected to deteriorate. Local investors Growth slowdown in Tanzania’s are expected to have less confidence main trade partners has reduced and delay private investment (70 demand and prices for its agricultural percent of total investment in 2018), commodities and final manufactured and cautious consumers will likely limit goods, and international travel bans their consumption of durable goods. and fear of contracting the virus Moreover, financial institutions that are expected to inhibit the recovery are internationally funded will have of tourism, which has been one of less to lend due to a decline in capital the fastest-growing sectors in the flows to emerging markets and a spike economy. In 2019 tourism contributed in risk aversion. Tanzania already has about 1.0 percentage point to total GDP a large share of nonperforming loans PAGE 2 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION at about 10 percent, a share that is economy. Furthermore, even if the global likely to grow if lines of credit are not health crisis is contained and Tanzania’s renewed and defaults emerge. With COVID-19 reported cases also decrease, less money to lend, banks may limit additional trade and logistics restrictions their regular operations, jeopardizing could continue disrupting global financial stability. Meanwhile, trade during the recovery. Tanzania’s disruptions in tourism, export-oriented macroeconomic performance has been manufacturing, and related services and strong for the last decade, but the intermediate inputs have already shrunk current crisis is an unprecedented shock the disposable income of employees that requires strong, well-targeted and in these sectors and thus of owners of sustained policy response. small- and medium-size businesses, which represent more than 70 percent Policy responses: Tanzania should of total businesses. Considering act quickly and strongly to avoid these transmission channels, private a protracted health and economic consumption growth is expected to crisis. decelerate from 5.2 percent in 2019 to Global experience suggests differing 2.4 percent in 2020, while gross capital trade-offs of crisis response across formation is expected to decelerate countries and the need for context- from 8.0 percent to 4.0 percent during specific strategies. Low income the same period. countries in Sub-Saharan Africa have The current outlook is highly uncertain, key differences compared to developed and risks are tilted to the downside countries; these are relevant when especially if global demand remains considering policy responses to address suppressed or government actions are the current crisis. Countries in the not strong, well-targeted or sustained. region have younger populations, larger The risks for a more negative growth informal sectors, weaker health systems outlook than the baseline described and generally lower capacity governance above are high. Under a severe local systems. They also have more limited outbreak, Tanzania’s health care system fiscal space and cannot afford expensive would become heavily strained, and self- lockdowns or mobilize significant imposed social distancing could dampen resources to alleviate the effects of much of the economy. This would likely the pandemic (e.g., 10 percent of GDP lead to a delayed economic recovery, or more in some developed countries and Tanzania would face continued such as USA and Denmark). Further, pressures to finance additional health recent research shows that suppression spending to save lives and provide measures could be less effective in support to protect livelihoods. Even if saving lives in lower income countries. the outbreak is contained in Tanzania, a This suggests that smart containment protracted/resurging global health crisis policies that protect the vulnerable and that continues in 2021 could undermine identify and isolate the sick, combined global demand, and thus, the Tanzanian with supportive economic measures, PAGE 3 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region may be more effective and practical in are being evaluated. The MoFP has countries like Tanzania to contain the accelerated payment of domestic virus and set the stage for eventual payment arrears and VAT refunds. economic recovery. This fiscal year, about Tanzanian shilling (TZS) 916 billion in verified The Government of Tanzania has taken domestic payment arrears was paid several steps to mitigate the COVID-19 through March 2020 and about TZS outbreak but can still do more 174 billion (equivalent to 148 percent given its favorable macroeconomic of the allocated budget) in verified conditions. To support a robust health VAT refunds paid through April 2020. and economic policy response, Tanzania The Bank of Tanzania (BOT) recently has in its favor a considerable fiscal reduced the discount rate from 7 to 5 space relative to other countries in the percent, lowered the minimum reserve region, high international reserves, and requirement ratio from 7 to 6 percent, favorable commodity price movements. increased the valuation on commercial Tanzania has enhanced preparedness banks’ holding of government securities and containment capacity through that can be used as collateral for measures to strengthen detection and borrowing, encouraged financial surveillance at airports, border crossings, institutions to consider restructuring of and other points of entry, and is training loans for severely affected borrowers, health care staff on case management, and relaxing the limits on mobile money risk communication, and community transactions. The BOT could consider engagement. The government has additional measures as needed such implemented several measures aimed at as loan guarantees for severely affected containing the spread of the COVID-19, firms and relaxation of the current including closing schools and colleges, capital and collateral requirements. suspending all public meetings, sporting events, and all international These steps already taken are passenger flights1. Additionally, the important but more needs to be government has encouraged hand done to ensure as quick a recovery washing and identified several public as possible: authorities are urged to and private hospitals that will serve as strengthen the health response to isolation centers for people infected the pandemic and implement further with coronavirus. economic mitigation measures to protect lives and livelihoods. The Government is implementing policy actions to boost liquidity in • Strengthened health response and the financial sector while additional transparency to save lives. Additional policies to protect households and resources should be directed to businesses in significantly affected reinforce Tanzania’s health response sectors, such as those in tourism, and implement a smart containment 1 Government has recently announced partial relaxation of some of these measures. Some schools and colleges have been reopened. They also announced resumption of sporting events and international passenger flights. PAGE 4 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION strategy to prevent cases from rising and deferrals. Short-term support to or resurge. Government should keep firms viable could include grants, mobilize adequate financial resources guarantees, concessional lending, to ensure equitable access to priority and increased bank lending, as well facilities and medical services. The as temporary reductions or delays priorities should include: provision in tax obligations. Additional short- of COVID-19 testing kits, Protective term measures might consider cash- Personal Equipments (PPEs) and transfers to low-income households, supplies for infection, prevention and expanding the coverage of safety net control; procurement of additional programs to the households most medical equipment for critical care affected by the economic slowdown, including ensuring oxygen supply; ensuring the reliability of food supplies refurbishment of facilities to provide and prices, and making sure children critical care; and training as well as from poor families return to schools hiring additional medical personnel. as they reopen. In doing so, it is important that the delivery of essential health services The Potential of the Digital Econ- is prioritized and sustained to avoid omy: The digital economy can excess non-COVID-19 morbidity strengthen the effectiveness of the and mortality and ensuring timely response to COVID-19 and become reporting of COVID-19 related a key driver of Tanzania’s recovery. information for policy-makers and the population at large. The digital economy can support the delivery of stronger policy responses • Protecting livelihoods and the future. and help contain the spread of the Recovery will require a healthy work virus. Tanzania could benefit from its environment, especially for the existing mobile accounts to streamline tourism sector. Economic measures new cash transfer schemes and can protect the most affected widen the coverage of existing social businesses and households and programs. Mobile banking could also accelerate a robust recovery in 2021. give companies in the informal economy quicker access to government benefits Important steps have been taken without formally registering, while by the BOT but more needs to be commercial banks could partner with done. The policy response requires a mobile banking providers to accelerate combination of stronger social safety the borrowing process to small and nets and support mechanisms to medium-sized enterprises (SMEs). mitigate further economic disruption Moreover, using digital technologies to by helping the private sector retain ensure the continuity of public services employees and alleviating the favors social distancing and, thus, can financial impact through a variety of reduce the velocity of transmission of wage compensation, loan subsidies, the virus. PAGE 5 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Globally, the digital economy is the online environment is secure and growing quickly, driven by demand easy to use. Canada’s Digital Charter, for for data. UNCTAD estimates that global example, states that “the way forward data traffic will expand from the current on data collection, management and 45,000 GB per second to 150,700 use must be built on a strong foundation GB in 2022. However, the speed of of trust and transparency between the expansion is uneven. Developed citizens, companies and government.” countries, especially the USA and China, are growing faster than developing A number of recommendations flow countries, widening the digital divide. from this Digital Assessment. There Data traffic in Tanzania has been rising, has been progress, notably on the but not fast enough to reduce the divide. connectivity front where Tanzania’s Data usage on the Airtel network, for high-volume data products (10GB and instance, grew by 52 percent in 2019, greater) are among the cheapest in but usage of Tanzania’s international East Africa. Furthermore, Tanzania is bandwidth is only a third of Kenya’s. One now connected to three international reason is that its retail internet prices for undersea cables and a new market low-usage data baskets are the highest entrant, Halotel, has rolled out significant in the subregion. amounts of fiber to rural areas. On the legal front, there had been progress on Expanding the digital economy the admissibility of electronic evidence, depends both on the interaction of eGovernment services are enabled, and digital platforms and on legislation. online auctions are recognized. These Digital platforms allow interaction are all very positive developments. online, with elements of payment, identification, and connectivity. A However, if the digital economy is framework that encourages trust is also to rapidly expand, and to respond necessary: if the digital economy is to effectively to the COVID-19 pandemic, grow, consumers need to be assured there are a number of interventions that they are protected online. This that the Government of Tanzania can requires that the laws keep up with consider, as set out at the conclusion technological developments and that of this report. These include moves to regulators are competent and effective. make mobile money and low-value data Firms need certainty and consistency in packages affordable for the poor and to all the jurisdictions where they operate. remove barriers that currently prevent competitive mobile operators from Both governments and firms investing in their own infrastructure. contribute to driving trust and Investment in enhanced coverage transparency online. Governments of mobile broadband in rural areas need to use online platforms and to is particularly necessary: it appears take the lead in making payments, by that the number of “notspots,” where using mobile money and showing that cellular signals are not available, may be PAGE 6 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION higher than official statistics suggest. To stimulate progress toward integration in the global digital economy, the government should seek to attract carrier-neutral data centers and content distribution networks. As physical trade declines as a result of COVID-19 restrictions, the government should also move to facilitate digital trade, primarily by passing a strong data protection act, with supportive regulations, and reviewing how intellectual property is protected online.   PAGE 7 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 1 The State of the Economy PAGE 8 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION 1.1 The Economy Before to 31.6 tons in 2019, though that is COVID-19 still below the 2015-17 average of 32.3 tons. Growth in construction (14.8 Tanzania’s economic growth was percent) was driven by work on public strong amid benign global condi- infrastructure, such as roads, bridges, tions and domestic credit expan- water supply facilities, and buildings, sion and on residential projects. This was reflected in the rise in production of Tanzania was one of the top three construction materials for the domestic growth performers in East Africa. market, such as cement, iron, and steel. Between 2013 and 2018, its average GDP growth (6.5 percent) was behind Other official high-frequency data only Ethiopia (9.5 percent) and Rwanda suggest that Tanzania’s annual GDP (6.7 percent). It was also among the growth in 2019 was closer to 6.0 least volatile economies in the region, percent. World Bank staff estimates after Mauritius and Kenya (Figure 1). using leading indicators based on According to official data, GDP growth expenditure data suggest GDP growth of through the first three quarters of 2019 5.8 percent in 2019, up from 5.4 percent was 6.9 percent, close to the official rate in 2018; monthly and quarterly data of 7.0 percent in 2018 (Table 1). Growth show that in 2019 public consumption, was led by nonmanufacturing industry, gross fixed capital formation, and notably mining and construction, and exports rose—as did both recurrent and by transport, communication, and development spending and tax revenue financial services. The growth in mining in 2018/19 and the first half of 2019/20. production (12.6 percent) was driven Also rising were credit to the private by a rebound in gold, which went up sector; imports of capital goods and raw by 11.6 percent, from 28.3 tons in 2018 materials; and the performance of the construction sector. Figure 1: Economic Growth, Tanzania and Comparators, 2013–18 3.5 3.0 Burundi 2.5 Growth Volatility 2.0 Zimbabwe 1.5 Mozambique Rwanda Ethiopia Comoros Malawi 1.0 Uganda South Africa Zambia 0.5 Madagascar Tanzania Kenya Mauritius 0.0 0.0 2.0 4.0 6.0 8.0 10.0 Average GDP Growth Source: NBS, WB staff estimates. PAGE 9 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 1: Official Quarterly Real GDP, January - September, 2018-19, Percent Growth Contribution to Growth Average 2013-2018 2018 2019 2018 2019 Gross Domestic Product 6.7 6.9 6.9 6.9 6.9 Agriculture 5.9 5.6 5.0 1.4 1.2 Industry 9.1 7.5 11.2 2.0 3.0 Mining and quarrying 6.3 0.9 12.6 0.0 0.5 Manufacturing 8.3 5.4 5.2 0.5 0.4 Electricity 5.4 4.4 6.6 0.0 0.1 Water 5.2 7.0 8.5 0.0 0.0 Construction 10.9 11.3 14.8 1.5 2.0 Trade and services 6.8 6.3 5.9 2.6 2.4 Trade and repair 6.2 5.1 5.4 0.5 0.5 Accommodation and restaurants 3.5 6.3 2.6 0.1 0.0 Transport and storage 7.4 11.5 8.8 0.9 0.7 Information and communication 8.2 10.6 11.0 0.2 0.2 Financial and insurance 3.9 -0.5 4.7 0.0 0.2 Public administration 5.4 3.5 3.1 0.2 0.1 Professional services 15.0 11.0 7.1 0.1 0.0 Administrative and support services 13.3 5.4 8.5 0.1 0.2 Real estate 4.3 4.4 4.5 0.1 0.1 Education 9.9 7.1 4.7 0.2 0.1 Health 7.0 10.1 1.1 0.2 0.0 Other services 9.0 8.3 6.8 0.1 0.1 Taxes on products 2.1 12.2 3.1 0.9 0.3 Source: NBS. Note: NBS has not released 2019 Q4 and Annual GDP figures. Figure 2: Inflation, 2018-20, Percent 25.0 20.0 15.0 10.0 5.0 0.0 Mar-18 Mar-19 Nov-18 Nov-19 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Dec-18 Dec-19 Aug-18 Aug-19 Feb-18 Apr-18 Feb-19 Apr-19 Feb-20 Oct-18 Oct-19 Sep-18 Sep-19 May-18 Jun-18 May-19 Jun-19 Headline inflation Food Inflation Energy inflation Target Source: NBS. Inflation was kept in check. In 2018–19 inflation up from 2019’s 2.3 percent to annual inflation averaged 3.5 percent, 6.6 percent in February 2020. However, the lowest rate since 2000. The country’s in the same period the inflation rate inflation rate has been the least volatile excluding food fell from 5.1 to 2.4 and one of the lowest in the East percent, partly because in February African Community. In February 2020, 2020 energy inflation plunged from 15.4 inflation reached 3.7 percent, up from to just 3.2 percent. 3.0 percent a year before but still below the 5.0 percent medium-term target As growth in exports outpaced growth (Figure 2). Rising prices pushed food in imports in 2019, the CAD narrowed PAGE 10 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION to 2.7 percent of GDP (Figure 3), down The CAD was primarily funded by from 3.9 percent in 2018. The value of external borrowing. Total external exports reached a historical peak of debt went up from US$21.0 billion in US$9.7 billion, driven by higher exports December 2018 to US$22.4 billion in of gold and manufactured goods. December 2019, driven by disbursements Exports had been stagnant since 2013. In to the central government. Yet inflows 2019, total exports grew by 15.7 percent are still lower than historical averages (Figure 4 and Table 2), driven by higher and external concessional borrowing exports of gold, manufactured goods, is below the average of the past five and travel services (tourism). Imports years, and between 2015 and 2018 rose along with domestic demand, FDI dropped by a third, from US$1.5 but more slowly than exports. In 2019, billion to US$1.0 billion (Figure 5, right imports went up 7.7 percent (Figure 4 panel). Official gross reserves reached and Table 2), led by intermediate goods US$5.6 billion in December 2019, up responding to an expanding oil import from US$5.0 billion in December 2018; bill (38.3 percent), followed by capital they are adequate to cover 6.4 months goods (6.6 percent). of imports of goods and services, above Figure 3: Current Account Deficit, Figure 4: Growth in Exports and 2016–19, Percent of GDP Imports, 2016–19, Percent Source: BOT. Source: BOT. Figure 5: Official Gross Reserves and Foreign Inflows, 2016-19, US$ Source: BOT. Source: BOT. PAGE 11 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 2: Trade Balance, 2017-19 (Millions of USD) (Annual percent change) (Shares) 2017 2018 2019 2018 2019 2018 2019 Goods 4524 4380 5573 -3.2 27.3 52.2 57.4 Of which Gold 1541 1524 2217 -1.1 45.5 18.2 22.8 Manufactured goods 694 795 985 14.5 23.9 9.5 10.1 Traditional exports 1021 772 830 -24.4 7.5 9.2 8.5 Services 3832 4015 4140 4.8 3.1 47.8 42.6 Of which Travel 2223 2449 2526 10.2 3.1 29.2 26.0 Transport 1122 1228 1295 9.4 5.5 14.6 13.3 Total Imports 10339 10198 10985 -1.4 7.7 100.0 100.0 Goods 8299 8067 9018 -2.8 11.8 Services 2040 2131 1967 4.5 -7.7 Source: BOT. the government threshold of 4 months in part the result of BOT interventions in and the SADC and EAC requirements of the foreign exchange market: to keep 4.5 and 6 months (Figure 5, left panel). the shilling stable, the BOT has moved to smooth out fluctuations and keep The Tanzanian shilling was steady. the interbank foreign exchange market From January 2019 to January 2020, orderly. the shilling depreciated by 0.7 percent against the U.S. dollar and 2.2 percent Growing credit to the private sector against the Kenyan shilling but and the accommodative monetary appreciated 1.1 percent against the policy pursued by the BOT caused Chinese yuan and 2.1 percent against M3 to expand. It grew by 9.6 percent the euro (Figure 6). The low volatility was in December 2019, up from 4.5 Figure 6: Nominal Exchange Rate, 2019–20, Figure 7: Real Effective Exchange Rate, 2019- Percent 20, Percent Source: OANDA Exchange Rates and World Bank Staff estimates. Source: OANDA Exchange Rates and World Bank Staff estimates. PAGE 12 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Figure 8: Lending Rates, 2019, Percent Figure 9: Growth in M3 and Private Sector Credit, 2019, Percent Source: BOT. Source: BOT. percent in December 2018 (Figure 9). Addressing NPLs requires coordinated Growth in credit to the private sector efforts to address such business went up by 11.1 percent in 2019, after environment challenges as the high expanding just 4.9 percent in 2018, domestic payment and VAT arrears. The as loans to agriculture, construction, government has already taken steps and transport services surged. Yet, to do so: it has adopted the Blueprint lending to micro, small, and medium for Regulatory Reforms, prepared the enterprises (MSMEs) was limited by the Business Facilitation Bill and SME Policy, high-risk premium, primarily because of and cleared nearly TZS 1 trillion in nonperforming loans (NPLs). Despite verified paymant arrears this fiscal year the rise in bank nonfunded (noninterest) through April 2020. income enabled by growth of digital and agency banking and the transfer Mid-year fiscal accounts showed of foreign exchange business to banks, improved execution of develop- there are still few loans to MSMEs ment spending and financing because of collateral requirements, the plans. risk premium, and the recent problems In the first half (H1) of 2019/20, the with high NPLs. fiscal deficit was just 0.4 percent of At 16.8 percent in December 2019, GDP (Table 3). Though in line with the commercial lending rates were still target of 0.5 percent for the period, it high, partly due to high NPLs (Figure was higher than the 0.1 percent for the 8). Although NPLs have declined over same period in 2018/19. With domestic the past two years, in February 2020 revenue almost at the same level as in they were still about 10 percent; the H1 2018/19, the rise was mainly driven BOT target is less than 5 percent. by spending, especially for development PAGE 13 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region projects. The lower deficit had been Spending pressure has intensified achieved by fiscal challenges, especially in advance of the general election shortfalls in domestic revenue and scheduled for October 2020. In recurrent spending and accumulation of 2019/20 H1 spending was much higher both domestic payment and VAT refund than H1 spending the year before, largely arrears. because more was spent on capital projects. However, last year’s spending Tax revenue nearly met its target was below target because the recurrent in 2019/20 H1 although the total budget was significantly underspent: domestic revenue target was missed, public spending amounted to 7.7 percent largely because nontax revenue fell of GDP—below the 8.5 percent target short of budget projections. Domestic but above the 7.1 percent in 2018/19 revenue was 7.0 percent of GDP— H1. Those shortfalls raise concerns less than the 7.5 percent targeted but about the quality of education, health, slightly higher than the 6.9 percent in and other social services and a possible 2018/19 H1. Tax revenue was short of accumulation of domestic payment the target by about 4 percent; however, arrears. Partly driven by pre-election that is much better than in previous pressures, development spending years when targets were missed by amounted to 3.3 percent of GDP, which more than 10 percent. According to the is in line with plans but significantly TRA tax revenue report of December higher than in 2018/19 H1. The largest 2019, all departments did collect more share of development spending was revenue; the TRA collected 96.3 percent directed to big infrastructure projects of total tax revenue target in 2019/20 in the transport and energy sectors, H1, up from 88.6 percent in 2018/19 H1. Table 3: Fiscal Accounts, 2018/19-2019/20, Percent of GDP 2018/19 2018/19 2018/19 H1 2018/19 H1 2019/20 H1 2019/20 H1 Budget Actual Budget Actual Budget Prel. actual In Percent of GDP Domestic revenue 15.5 13.8 7.6 6.9 7.5 7.0 Tax revenue 13.3 11.4 6.5 5.8 6.4 6.2 Nontax revenue 2.3 2.3 1.0 1.1 1.1 0.8 Total expenditure 19.5 16.6 9.5 7.1 8.5 7.7 Recurrent expenditure 10.6 10.3 5.4 4.5 5.1 4.4 Wages and salaries 5.5 4.9 2.7 2.5 2.5 2.4 Interest payments 1.6 1.8 0.9 0.7 0.8 0.8 Goods and services 3.5 3.5 1.7 1.3 1.9 1.2 Development expenditure 8.9 6.3 4.1 2.6 3.4 3.3 Domestically financed 7.3 4.8 3.3 2.0 2.5 2.4 Foreign financed 1.6 1.5 0.8 0.6 0.9 0.9 Grants 0.8 0.3 0.4 0.2 0.5 0.3 Overall fiscal deficit -3.1 -3.1 -1.6 -0.1 -0.5 -0.4 Financing 3.1 3.1 1.6 0.1 0.5 0.4 Foreign (net) 2.3 0.9 0.4 0.0 1.0 1.2 Domestic (net) 0.9 2.3 1.2 0.1 -0.4 -0.8 Source: MoFP. PAGE 14 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION including standard gauge railway, the Figure 10: Public Debt, 2016-19, Julius Nyerere Hydro Power project, and Percent roads. Government financed the budget deficit in 2019/20 H1 mainly through external borrowing. With capital projects speeding up and the negotiation of agreements for non-concessional loans, disbursement of both commercial and concessional external loans was higher than planned. Disbursement of external loans was 1.2 percent of Source: MoFP. GDP, against a planned 1.0 percent; none were disbursed in 2018/19 H1. Government also used some of the Business environment reforms need more consultation and a fast- external borrowing to advance planned er pace. repayment of domestic creditors, from 0.4 to 0.8 percent of GDP. The number of new businesses registering in Tanzania continued The rising share of commercial debt, to decline. According to WDI (World much of it domestic, raises concerns Development Indicators 2020) the about liquidity. The IMF–World Bank number of new businesses registering Debt Sustainability Analysis, updated every year has fallen by 30 percent, in April 2020, found the risk to be low: which suggests significant disincentives in December 2019 the nominal public in this part of the economy (Figure debt-to-GDP ratio was an estimated 11). The business environment has 40.7 percent, far below the 70 percent been affected, for instance, by delayed threshold and down slightly from about payment of VAT refunds to exporting 41.0 percent in December 2018 (Figure firms and arrears to domestic suppliers. 10).1 However, commercial financing of Because VAT verification is lengthy, the budget, which was just 4 percent in some arrears are more than three years 2010/11, reached about 25 percent in past due. Moreover, the government has December 2019. As a result, in 2019/20 not made the legal changes and taken debt service is expected to consume the cross-ministry actions necessary to about 40 percent of domestic revenues. enhance the functions of the Tanzania Bureau of Standards, Weights and Measures Department, or made it easier for investors to get work and residence permits. 1 This figure excludes debt for which relief is being negotiated and Treasury bills issued to support monetary policy. PAGE 15 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region In the first quarter of 2020, the pace forward for attracting more and more of business environment reforms was sustainable investments. still slow. The Blueprint for Regulatory Reforms, drafted after consultation with High economic growth did not the private sector and endorsed by the translate into poverty reduction. government in May 2018, specifies Despite substantial economic growth actions to abolish or rationalize a range during the period 2011 to 2018, of licensing requirements. While in the poverty reduction was modest2. GDP last three years, fees and charges have rose on average by 6.4 percent per year, been eliminated, as recommended but annual GDP growth per capita was by the Blueprint, little has been done only 3.2 percent, taking into account to streamline licensing and make population growth. GDP per capita in institutional changes. Moreover, the 2018 was 23 percent higher than in Tanzania National Business Council 2011 (Figure 12). The poverty reduction needs to be revitalized if it is to deliver response to economic growth is referred on its mandate to promote and sustain to as ‘poverty-to-growth elasticity’. public-private dialogue. During 2011-2018 it was only -0.26, Figure 11: New Firms Registering for among the lowest in the world. If we Business, 2014-18 take its average value for Africa of -1.88, the poverty head count in Tanzania in 2018 should have been 40 percent3 lower than what it was in 2011. Instead, it was only 6.4 percent lower, when using the national poverty line. Poverty along that measure dropped from 28.2 percent in 2011 to 26.4 percent in 2018, according to the Household Budget Survey (HBS) 2011/12 and 2018. That is a relative reduction of 6.4 percent and Source: WDI. an absolute reduction of 1.8 percentage points. The 2020 changes to the Arbitration Act to allow international arbitration The poverty head count ratio barely could boost the confidence of responded to growth. Poverty reduced foreign investors. The act not only by 0.25 percentage points per year allows investors to access international while in recent years the average for arbitration, it also covers sovereignty Sub-Sahara Africa has been 0.72. As over Tanzania’s natural resources; the population continued to grow fast, public-private-partnerships (PPPs) the number of poor in Tanzania rose with foreign parties; domestic and 2 This section is based on Tanzania Mainland Poverty Assessment 2019. international commercial arbitration, 3 The African average poverty-to-growth elasticity is -1.88. and “enforcement of foreign arbitral Multiplying that figure by 23 percent gives -40 percent. (The global average of poverty-to-growth elasticity awards.” These changes are steps excluding Africa is -3.33.) PAGE 16 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION from 12.3 million in 2011 to about 14 Education indicators improved million in 2018. Using the international between 2011 and 2018, but only extreme poverty line of US$ PPP 1.9 per marginally for secondary education. day, poverty remained at 49 percent Gaps between poor and non-poor between 2011 and 2018 (Figure 12 and children are substantial, but they 13): according to this measure, poverty are even larger between rural and did not respond to growth at all. urban areas. Between 2011 and 2018 net enrollment in primary school went During 2011-18, the agricultural up by 14 percentage points, but in sector contribution to GDP grew much lower secondary school this was only slower than the rest of the economy, 3 percentage points. In 2018 lower averaging 4.4 percent a year or 1.4 secondary net enrolment was still percent per capita. With 75.5 percent only 26 percent in rural areas, half the of the poor dependent on agriculture number in urban areas where this was for their livelihoods, agricultural sector 50 percent. It was 25 percent among the growth is crucial for poverty reduction. poor compared to 38 percent among In 2018 agricultural GDP per capita the non-poor. In Tanzania, enrolment was 10 percent higher than in 2011, rates for upper secondary school have while in industry it rose by 55 percent not risen and remain low at 2 percent, and in services by 26 percent. However, much below other African countries only 7 percent of the poor work in such as Malawi where this is 9 percent industry and 17.5 percent in services. and Zimbabwe (34 percent). Growth does more to reduce poverty when it occurs in sectors that employ Poverty reduction was driven by the poor. Global evidence shows that improvements in the endowments4 growth in agriculture, for example, has of households in poorer income been on average two to three times groups, although their returns have more poverty-reducing than the same dropped. Tanzanian households have amount of growth elsewhere in the seen a marked increase in access to economy, at least when land has been basic services and infrastructure, which distributed fairly equally (Beegle and has accelerated since 2012. Ownership Christiaensen 2019). of assets has also expanded among the poor, but opportunities for their Between 2011 and 2018 consumption productive use have not. Mobile phones, grew significantly less for Tanzanians at for example, continue to positively affect the bottom of the income distribution the livelihoods of the poor, but their than among the better-off. Total real marginal benefits have narrowed since consumption growth between 2011 2012, especially in urban areas and for and 2018 was between 0 and 1 percent moderately poor households. Returns to for the poorest 50 percent, while it was owning a bicycle have dropped. Gains between 1 and 3 percent for the richest in income and consumption associated 50 percent. On average, consumption with primary education have dropped, growth was somewhat higher in urban while the correlation between welfare than in rural areas. 4 Such as education, assets and durable consumption PAGE goods. 17 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 12: Tanzania Poverty Trend Based Figure 13: Tanzania Poverty Trend Simulation on Tanzanian Poverty-Growth Elasticity, Using Average African Poverty-to-Growth 2011-18 Elasticity, 2011-18 Source: Based on HBS 2011/12 and 2018 survey data and Source: Based on HBS 2011/12 and 2018 survey data and World Bank data. World Bank data. Figure 14: Household Consumption Growth 2011-18 by Welfare Percentile (Growth Incidence Curve) Source: World Bank (2019). Tanzania Mainland Poverty Assessment, using HBS 2011/12 and HBS 2018 household surveys. and postsecondary education has households, according to the HBS 2018. increased significantly, benefitting the Childhood poverty affects nutritional richest urban households. status, school achievement, and thus long-term earnings potential and the The larger the household, the poorer hope of moving beyond poverty as it is, and most poor children live in large households. The number of adults. Recent research on African children under 15 in poor households is poverty shows that reducing the birth almost double the number in nonpoor rate has the greatest impact on poverty PAGE 18 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION reduction. If the number of children Tanzania is already suffering per African woman - currently 5.0 in substantial economic costs. Decreased Tanzania - would be equal to the global external demand and travel bans in median of 2.5, poverty would fall by 1.8 Tanzania and abroad have already had a percent for every 1 percent of growth. severe impact on the tourism sector and While, in recent decades, outside dampened other non-traditional exports Africa average unwanted births have as well. Externally oriented companies decreased from 1 to 0, in Africa it is still are reporting significant declines in their 2 (Günther and Hartgen 2016, quoted in expected sales. Tour operators expect a Beegle and Christiaensen 2019). decline in 2020 revenue of 80 percent or more, while major exporters of fruits 1.2 COVID-19 Impact and the and agricultural products expect a loss Medium-Term Outlook of around 40 percent. The production Short-term outlook: The oriented towards the domestic coronavirus pandemic has economy is also softening as some dramatically undercut Tanzania’s Tanzanians adjust behavior to avoid the growth outlook and will increase coronavirus through work absenteeism poverty in 2020. and avoiding large gatherings. Data provided by Google on urban mobility The economic impacts of the in Dar es Salaam shows a decline of COVID-19 are widespread and not around 30 percent in workplaces, transit specific to Tanzania, with the latest stations and retails and restaurants. World Bank estimates suggesting the Lower activity is expected to erode the global economy is in recession. The tax base, in particular in sectors that forecast is for an unprecedented global have already ceased to operate such as recession, with global GDP projected to tourism. decline by about 5 percent.5 The crisis is still evolving, and there are major Growth is expected to remain positive uncertainties depending on the pace and but dip sharply in 2020 to 2.5 percent extent of the spread of the coronavirus. assuming Government takes action to The pandemic has brutalized real and strengthen the health response and financial sectors around the world. help mitigate impact on livelihoods Trade flows have sharply contracted, (Table 4). Our baseline is based on value chains have been disrupted, both available data through April 2020 and investment and domestic demand have is subject to considerable uncertainty plunged, and commodity prices have given impacts are currently unfolding. become even more volatile. Financial Government has taken some non- volatility has reduced capital flows into economic measures (closing schools, emerging markets, and large emerging banning public gatherings except economies risk sudden stops. religious, suspending international flights) though Government recently announced gradual reopenning starting 5 World Bank Global Economic Prospects (June 2020). PAGE 19 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region in June 2020. The BoT has reduced the related to tourism and to transport discount rate and lowered borrowing services to neighbor countries, costs for banks. Our projection assumes reducing employment in that sector these measures will be strengthened and in related activities. Exports during the year and complemented by of manufactured goods will also additional programs targeted to help decrease due to a contraction in vulnerable households and affected global demand. businesses, though the timing and Key transmission channels under our scope are uncertain. Key assumptions baseline scenario include: for aggregate demand in our baseline are: • Export demand will decrease as growth slows for Tanzania’s • Consumption: Growth in private main trade partners and travel consumption, accounting for restrictions halt tourist arrivals. roughly two-thirds of GDP, will slow Firms exporting agricultural as a result of higher consumer risk commodities and final manufactured aversion, higher precautionary goods will continue to be affected. savings, and loss of disposable For Tanzanian exports like textiles income due to unemployment or less that are part of global value chains, hours worked. Public consumption, this will in turn reduce demand accounting for roughly 9 percent for imported raw materials and of GDP, will see an increase due to intermediate goods. The volume of higher government expenditures exports will also shrink as disruption on health and social protection in in value chains pushes up the response to the pandemic. costs of inputs and transportation, • Investment: Growth in private delaying import delivery times and investment will also fall severely, thus the quantity of the imports from 8 percent in 2019 to 4 percent that exporting industries use as raw in 2020, due to the surge in global materials. Preliminary reports from uncertainty, reduced capital inflows the port of Dar es Salaam show that to the region and increased investor maritime traffic has slowed down. risk aversion across all sectors of the Second-round effects will also be economy. generated by Tanzania’s regional trade partners that also export to • External: The current account Europe and Asia. As these countries deficit is expected to increase from experience lower demand from 3.0 percent to 3.9 percent, with China, India and the EU, they will contractions in global demand seek fewer goods and services from outweighing positive price Tanzania. Our baseline assumption developments for oil and gold. The is for exports to decline by 10.0 global slowdown and travel bans percent, and imports by 1.5 percent, will reduce exports of services driven mainly by lower volumes. PAGE 20 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Box 1: Out of Africa? How the Pandemic Is Affecting Tourism in Tanzania Tourism has been a significant export and driver of economic growth for Tanzania. Tourism, measured by the GDP of related services such as transport of passengers and accommodation and restaurants, has been one of the fastest-growing sectors in the economy contributing an estimated 1 percentage point to GDP growth in 2019. The sector has attracted new private investment for infrastructure and brought in about 25 percent of 2017 FDI inflows (US$247 million). Moreover, exports of tourism services are considerably higher than in other EAC countries. Between 2014 and 2018 the number of non-African tourists increased by 31.1 percent and in 2018, Tanzania became the seventh most visited country in Sub-Saharan Africa, attracting more than 1.5 million visitors for the first time. Tourism has been severely affected by COVID-19, and a very weak peak season is expected in the third quarter. International travel bans have almost stopped the flow of tourism in Zanzibar and Kilimanjaro, and occupancy rates are close to zero. Consequently, most of the hotels catering to international visitors have suspended their operations to reduce costs and avoid contagions. Although there is no official data on layoffs in the sector, many tour operators report layoffs. The toll is expected to be heavier between June and October when one third of the total annual tourists usually visit Tanzania and Zanzibar. The main tourism operators in the country are forecasting a revenue decline of 80 percent or more this year, and a very weak recovery next year. The contraction of tourism has multiplier effects in the economy. Suppliers and subcontracted companies working with tourist operators, hotels and restaurants, have seen their demand severely reduced. The loss of income of the people working in these sectors is eventually translating into lower domestic demand, and disproportionately affects informal workers in the sector who do not have enough savings and access to credit. Recovery of the sector will depend on potential tourists feeling Tanzania has a safe health environment, including relative to regional options. Even in the absence of travel bans and lockdowns, negative travel advisories in the countries of origin, the fear of contracting the virus and lower global growth are expected to inhibit the expansion of tourism. Transparency in reporting zones of higher contagion and the number of cases, accompanied by smart containment measures, could signal a strong commitment to contain the virus and bring back more tourists. Tanzania could follow the lead of touristic European countries such as Spain and Italy, which are already discussing strategies to support the recovery of the sector in 2021. Moreover, tourism from neighbor countries could partially alleviate the loss of tourists from other regions. Tanzania’s visitors from Kenya, Uganda, Rwanda, Burundi, Malawi, Zambia and Mozambique represented 36 percent of 2018’s flow of visitors, increasing more than 10 percent annually since 2014. While tourists from neighboring countries are likely to spend less than visitors from other regions, by going to Tanzania, they could also help signal that the country is safe and ready to receive visitors again. PAGE 21 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 4: Medium-Term Outlook, Annual Percent Change Unless Otherwise Indicated   2018e 2019e 2020f 2021f Real GDP growth, at constant market prices 5.4 5.8 2.5 5.5 Private consumption 7.2 5.5 2.0 5.5 Government consumption 4.3 6.8 9.0 0.7 Gross fixed capital investment 7.7 8.0 4.0 8.7 Exports, goods and services -3.9 4.5 -10.0 6.5 Imports, goods and services 8.5 9.5 -1.5 11.3         Inflation (consumer price index) 3.5 3.8 3.8 3.5 Current account balance (% of GDP) -3.9 -3.0 -3.9 -3.8 Net foreign direct investment (% of GDP) 1.8 1.8 0.8 1.5           Fiscal balance (% of GDP, in FY) -1.9 -3.2 -4.2 -3.5 Debt (% of GDP) 36.7 36.2 38.5 39.1 Source: World Bank staff estimates and forecasts. • Lower transit trade is also Salaam port are Tanzanian), which expected to decrease Tanzanian are estimated to represent around exports of transport services to 75 percent of total exports transport its neighbors. Dar es Salaam port services (US$ 1.3 billion in 2019). is the second largest port in East The regional transport corridors Africa and has become a gateway are also key for Tanzania’s trade for Tanzania’s neighbor countries. with its neighbors, given that its Preliminary exports-imports data at exports to countries in East Africa the transaction level for 2018 show have become more prominent: that between 25 and 30 percent of Tanzanian exports to the region in the total imports that arrive through 2018 represented 16.7 percent of its Dar es Salaam are later sent using total exports (up from 8.5 percent land transport to Uganda, Rwanda, in 2001), with Kenya (6.6 percent), Burundi (through the Northern Malawi (2.2 percent), Burundi (2.2. and Central corridors) and Zambia percent), and Zambia (0.8 percent) and Malawi (through the Southern as the main trade partners. corridor). Disruptions and closures at the borders could reduce the • Tanzania’s external position will traffic and thus the exports of freight benefit from higher gold prices transport (90 percent of registered and lower oil prices. The external trucks carrying cargo from Dar es position is highly vulnerable to volatility in gold and oil prices. In PAGE 22 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION 2019, oil accounted for 20 percent plunge in global growth and the rise of total imports and gold for about in uncertainty have caused major 20 percent of total exports. Recent capital flight from emerging markets price developments for these because of both the reduced appetite commodities have been favorable. of investors and the higher cost of In the twelve months ending with capital for projects in Tanzania. The March 2020, the value of gold result will be a further reduction in exports rose by 22 percent as FDI, which had already been slipping prices bounced back from a low of in the last few years because of the US$1,301 an ounce in March 2019 deteriorating business environment. to US$1,592—a level not seen We expect FDI as a share of nominal since March 2013. Over the same GDP to be lower than 1.0 percent. period, oil prices fell by 50 percent In addition, the decline in capital to US$32.2 per barrel, reflecting flows to emerging markets has put lower jet fuel demand and increased pressure on exchange rates (as in production (Figure 15). This will South Africa) and can dilute the also have a favorable impact on the effectiveness of monetary policy. external position by lowering the However, because the BOT has a oil import bill. Yet, the increased healthy reserve position exchange volatility observed in commodities rate volatility has not yet spiked. prices in the last two months add considerable uncertainty to our • Domestic business conditions forecast of Tanzania’s external are expected to deteriorate, a accounts. situation that will worsen if the spread of the virus is widespread. As • Foreign investment will become a result, domestic investors will lose even scarcer and financial markets confidence and delay investment will continue to be stressed. The projects, and consumers as a Figure 15: Energy and Metal Prices, 2018-20 Source: World Bank Commodity Price Data (The Pink Sheet). PAGE 23 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region precaution will save more and limit or sustained. The global spread of consumption of durable goods. In COVID-19 continues evolving and in addition, disruptions in tourism, East Africa the pandemic crisis started export-oriented manufacturing, and later than in other regions. The risks for related services are shrinking the a more negative growth outlook than disposable income of employees in the baseline described above are high these sectors and owners of small- and increasing as local transmission and medium-size businesses. Thus, has progressed to community we expect private consumption to transmission. Tanzania’s vulnerability to decelerate from 5.5 percent in 2019 an uncontained spread is high: under a to 2.4 percent in 2020, and gross severe outbreak, Tanzania’s health care fixed capital investment from 8.0 system would become heavily strained, percent to 4.0 percent. and self-imposed social distancing could dampen much of the economy. Even if • With the COVID-19 pandemic, the outbreak is contained in Tanzania, more workers will self-isolate, a protracted global health crisis that even if there is no mandatory continues in 2021 could undermine policy for social distancing, global demand, and thus, the Tanzanian and some workers will become economy. Tanzania’s macroeconomic ill. Both effects will reduce GDP performance has been strong for the through lower labor productivity. last decade, but under a downside The toll would be heaviest on the scenario Tanzania would face pressures informal economy where there is to finance economic measures and no safety net: there, a decline in additional health spending, as well as hours worked will cause a loss of mobilize resources to provide liquidity to disposable income. Even though the private sector and avoid a financial our baseline scenario assumes crisis. Moreover, high NPLs and high that the impact of coronavirus will interest rates could undermine any start phasing out in 2020, there is monetary policy designed to boost a significant downside risk of long- credit to the private sector. Even if the lasting negative spillovers on labor global health crisis could be contained, productivity, schools closed for a and Tanzania’s COVID-19 reported cases significant period, and dramatic decrease, additional trade and logistics effects on future productivity, thus restrictions could continue disrupting reducing permanently potential global trade during the recovery. GDP growth below 6.0 percent. Moreover, the absence of a sequential The current outlook is highly program to support the recovery phase uncertain, and risks are tilted to the could delay the expected rebound of downside especially if global demand the economy, affecting investors and remains suppressed or government consumers expectations, and thus actions are not strong, well-targeted hindering new investment projects. We PAGE 24 have estimated a range of projections by travel bans and the global trade under varying assumptions to factor in standstill. Companies in tourism and all these possibilities (Figure 16). In the related services, and in exports of worst case, the Tanzanian economy agriculture and manufacturing goods would not grow in 2020 and have a are reporting a considerable decline more limited rebound in 2021. in sales and production, and some operations such as the sales of fruits Beyond the macro numbers, to Europe or accommodation services coronavirus is impacting lives and in Zanzibar have come completely to a livelihoods. halt. Thus, workers that rely on these The COVID-19 pandemic is affecting sectors for their livelihood will face direct people’s welfare and household income losses. If they are self-employed livelihoods, particularly those relying or work for a micro enterprise, they are on self-employment and informal/ particularly vulnerable. Sales of suppliers micro enterprises. Evidence from to these sectors are expected to follow, middle-income and low-income and as the income effect propagates countries impacted before Tanzania into the rest of the economy, through suggest that the income shock hits lower salaries, higher unemployment, urban populations disproportionately. lower demand for consumption goods Within this group, the poor employed and production inputs, the activity in the in the informal economy are likely to wholesale and retail trade sector, and in bear the most severe impacts: not the overall services sector, is expected only do they tend to live in congested to decrease. The propagation of the settlements with limited access to basic initial shock will be magnified by self- services but also they lack adequate imposed social and physical distancing safety nets and have limited savings. measures, even in the absence of strong They are usually self-employed (in 2018 containment measures. about 14 percent of households were Simulations using the 2018 HBS operating their own businesses) or work suggest an additional 500,000 in micro and small firms, and thus, could Tanzanians could fall below the not be able to benefit from support poverty line. The impact on poverty and relief programs oriented towards depends on the impact of COVID-19 formal companies. On the contrary, the on economic activity and the number poor working in rural areas, mainly in of people living close to the poverty agriculture, may be able to cope initially: line. In Tanzania, a large proportion of their location could minimize their the population is clustered around the exposure to the disease; yet, as the virus poverty line. Slow progress in poverty spreads, it is expected to also constrain reduction in the last decade has pushed their access to basic health services. up the number of poor people, leaving a The hardest hit sectors by the initial noticeable share of the population still at shock are those directly affected risk of at least transitory poverty. Thus, PAGE 25 Figure 16: Real GDP Growth Forecast GDP Forecast 10 8 6 4 2 0 -2 2015 2016 2017 2018 2019 2020 2021 2022 Note: The fan chart shows the distributions of the likelihood of different GDP growth outcomes in 2020, 2021 and 2022. The estimation is based on a set of growth scenarios and risk profiles under different combinations of the virus spread, containment measures and economic policy responses. The darker bands are the most likely outcomes, and the central black line is the baseline scenario. Source: WB staff estimates, NBS. even a mild shock on economic activity increases in poverty in all urban areas could push a significant proportion and assume the impact will be mild in of Tanzanians into poverty. Using the Tanzania’s rural areas; yet, under more estimated per capita sectoral growth severe scenarios where the virus spread rates to predict 2020 household income is uncontained in urban and rural areas based on the HBS 2018 data, we find and the economy grows below 2.5 that the COVID-19 crisis could increase percent in 2020, more than 1 million the poverty rate by at least 2.5 percent. Tanzanians could fall below the poverty The increase would be higher in urban line (Figure 17). Moreover, COVID-19 is areas (5.0 percent) compared to rural expected to reduce the transition out of areas (1.9 percent). poverty which has been coupled with shifts to more productive activities, Most workers in impacted sectors within agriculture or services, i.e., not are urban informal workers. For only is COVID-19 expected to increase instance, about a third of workers in the current number of poor people, but ‘accommodation and food service’, and also to increase future poverty. ‘transport and storage’ are working informally but this proportion is higher Households with elderly members among women (50 percent). As a may be particularly vulnerable to result, urban poverty is likely to increase, unexpected costs for health care. The including a disproportionate negative elderly (65+ years old) form only 2.6 impact on women and households with percent of the total population, a share elderly persons. Our simulations show similar to other countries in East Africa. PAGE 26 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 5: Number of People Working in the Sector, 2018 Individuals Household heads Accommodation and food service activities 854,000 362,000 Transportation and storage 539,000 416,000 Wholesale and retail 743,000 401,000 Construction 462,000 343,000 Agriculture, forestry and fishing 7,560,000 3,426,000 Other service activities 1,067,000 552,000 Source: 2018 HBS, and World Bank staff estimates Households with at least one elderly live on daily incomes. These workers person are somewhat more rural than are particularly exposed to job loss and the population as a whole, not poorer generally do not have local support than other households, but tend to systems. The health systems in many more commonly be female headed and African countries are also ill-prepared to less connected to electricity and piped handle a pandemic of this magnitude. water than other households. About In addition, there are often resource and a fifth of this group benefits from a capacity constraints on government social protection program, most likely a to deliver other key services to control pension. A health cost shock equivalent the virus including adequate water and to 20 percent of per capita consumption sanitation. of these households would increase poverty by two percentage points, Tanzania has several advantages leading to an additional 939,476 poor in compared to many other African rural areas and 145,548 in urban areas. countries to respond to the crisis. Tanzania has several factors in its Government support can help protect favor to support a robust health and lives, livelihoods and the future. economic policy response to mitigate the negative effects of the pandemic. African economies face unique First, the country has a considerable challenges to addressing the current fiscal space given its track record of crisis. The high degree of informality is low fiscal deficits and current low risk a key consideration for thinking about of debt distress. Second, international policy actions to mitigate negative reserves are relatively high, at 6 months impacts. Tanzania is estimated to have of import cover. And third, the country the second highest degree of informality is benefitting from commodity price among sub-Saharan African countries.6 movements as an oil importer and gold This includes many workers in informal exporter, which is working to dampen services residing in urban areas and who the overall trade impact. 6 Reference: IMF working paper by Medina, Jonelis and Cangul (WP/17/156). PAGE 27 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 17: Number of Poor People in Tanzania, 2006-20, Millions 14.4 13.9 13.2 12.3 11.2 11.3 11.4 10.4 2.6 3.0 2.0 1.9 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Urban Rural Tanzania Mainland Source: 2018 HBS, and World Bank staff estimates The World Bank recommends 1. Protecting lives a three-pronged framework for Implementing health measures African countries to respond to already underway. Government's the COVID-19 pandemic and the initail measures to contain the spread economic crisis—protecting lives, of the COVID-19 virus included closing livelihoods, and the future.7 To protect schools and colleges, suspending all lives, measures should be focused on public meetings and sporting events, prevention, detection and treatment of and all international passenger flights, the coronavirus. Protecting livelihoods and training of medical staff on case- as economic activity slows includes management, risk communication measures to protect families, firms, key and community engagement, and government functions, and supporting directed each LGA to prepare isolation essential economic activities. Beyond centers.8 Additionally, the government the immediate crisis, investments need has encouraged hand washing and to be made in recovery and growth. The identified quarantine centers and public foundation for the future needs to be and private hospitals with about 500 put in place by ensuring faster recovery, beds that will serve as isolation centers sustainable growth and resilience to for people infected with coronavirus. future crises. Ministry of Health has prepared The above provides a useful sound costed contingency plans for framework for considering priority Zanzibar and Tanzania (US$178 million policy areas. Policy actions can help – Mainland US$148 million/Zanzibar mitigate the pandemic’s negative impact US$30 million) in line with the World on economic development, especially Health Organization (WHO) Operational on the poor and most vulnerable. 8 Gorvernment has recently announced partial relaxation of some of these measures. Some schools and colleges have been reopened. They also announced resumption of 7 Reference: World Bank Africa Region. A Framework for sporting events and international passenger flights. Operational Response to the COVID-19 Pandemic and Global Crisis. April 2020. PAGE 28 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 6: Poverty Headcount in Selected Urban Areas, 2018-20, Percent 2018 2020 projection (baseline scenario) Dar Es Salaam 8.0 8.6 Kilimanjaro 11.5 14.8 Pwani 11.7 14.0 Ruvuma 20.7 26.8 Mbeya 26.6 29.8 Singida 20.1 23.1 Source: 2018 HBS, and World Bank staff estimates. Planning Guidelines to Support equipment (PPE); and (iv) ensuring Country Preparedness and Response. timely reporting with relevant local and For immediate health response it has international stakeholders.  Mobilization secured US$26.5 million from DP of resources should be prioritized and resources and mobilized US$4 million targeted to provide COVID-19 testing from internal resources, including kits, provision of PPEs and supplies private sector. for infection, prevention and control; procurement of additional medical Catalyzing a stronger and more equipment for critical care including transparent health response. In ensuring oxygen supply, refurbishment addition to expeditiously implementing of facilities to provide critical care, and the contingency plan, additional training as well as hiring additional domestic resources need to be medical personnel. In doing so, it is mobilized to close the financing gap. important that the delivery of essential Greater attention should be given to health services is prioritized and the following areas: (i) implementation sustained to avoid excess non COVID-19 of non-pharmaceutical interventions morbidity and mortality. to promote social/physical distancing with the aim of reducing transmission 2. Protecting livelihoods and avoiding overwhelming capacity Protecting jobs and MSMEs. The of the health services delivery; (ii) authorities have taken several strengthening surveillance and economic measures to mitigate the diagnostic capacity including testing negative impacts of COVID-19 and is in order to promptly detect cases and actively considering further measures. establish drivers of transmission in the The MoFP has accelerated payment country;  and (iii) treatment and care of of domestic payment arrears and COVID-19 cases; infection, prevention VAT refunds. This fiscal year, about and control measures and protection Tanzanian shilling (TZS) 916 billion of frontline health through provision in verified domestic payment arrears of adequate personnel protective PAGE 29 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Box 2: Building confidence: The role of information in the response to COVID-19 The South Korean response to the pandemic shows the benefits of having a transparent approach, including public participation, collaboration with international stakeholders, and systematic management of the cases. Regular communication to the public can also help build public trust and confidence in institutions, which is paramount in a smart containment approach, where political capital is key to implement difficult reforms for the most vulnerable groups and for a flexible shielding approach that increases compliance for staying at home if needed. For South Korea, this method has proven successful and alleviated the need for stricter measures. Greater transparency can increase the effectiveness of Tanzania’s public health response, allowing for more targeted measures and actions. A stronger information base would facilitate greater collaboration and partnership with relevant local, regional and international stakeholders. Transparency should also be the cornerstone of the economic relief and recovery measures. Without adequate and consistent public estimates of the expected impact of COVID-19 on lives and livelihoods of various groups, and of the resources available and the financing gaps, the response can only be partially effective and non-targeted. Moreover, the risk of not reaching those in real need will be higher. Stronger transparency also works as a signaling strategy. Consistent reporting of cases is needed to convince the public that the pandemic has “passed its peak” and to give them confidence to resume activities. By making all the relevant information public and by communicating in a timely and orderly manner, the government can signal to the private sector and to other governments that public policies are aligned to reduce the number of cases and deaths, and to allow business and households to operate and work again in a safe environment. As mentioned in Box 1, this strategy can help bring new visitors in the country. It also can accelerate the recovery of domestic demand, and in particular, of domestic private investment, and thus, the creation of jobs. was paid through March 2020 and of productive capacity due to potential about TZS 174 billion (equivalent to bankruptcy of firms that would have 148 percent of the allocated budget) in been financially viable without the verified VAT refunds paid through April pandemic, particularly in sectors most 2020. The government has established affected by the crisis and affected global a National Task Force chaired by the supply chains. Potential modalities Prime Minister to lead both the health for these measures could include and economic policy responses to the wage compensation schemes, loan COVID-19 crisis. Additional measures will subsidies, and tax deferrals. Currently be needed to help avoid the destruction the committee is considering a range of PAGE 30 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION additional economic policy measures, the minimum reserve requirement ratio including further clearance of domestic from 7 to 6 percent, effective June 8 2020, payment arrears owed to SMEs and tax increasing the valuation on commercial deferrals and loan guarantees for the banks’ holding of government securities mostly affected sectors such as tourism that can be used as collateral for and the hospitality industry. borrowing, encouraging financial institutions to consider restructuring of Strengthening social safety nets. loans for severely affected borrowers, Additional policies can include fiscal and encouraging more use of mobile measures to help protect and provide money by increasing amount of daily support to vulnerable households. transaction from TZS 3 to 5 million and TASAF’s Productive Social Safety Net daily balance from TZS 5 to 10 million. program (PSSN) role toward protecting The BOT could consider additional lives during the COVID-19 pandemic measures such as loan guarantees for is limited given that is mainly oriented severely affected firms and as well as to rural families, while the most relaxing the current capital and collateral vulnerable households to the virus requirements for borrowers. The are in the informal urban economy. regulatory and supervisory responses Policymakers should consider lumping should strike the right balance between payments (i.e. carrying out multiple preserving financial stability and payments during one payment window) supporting economic activity. to PSSN beneficiaries to minimize large gatherings and movement of 3. Protecting the future people. Mobile technology could also The timing and strength of an eventual help maintain social distancing. PSSN recovery in 2021 will depend on the benefits could be increased temporarily government policy response in 2020 for all or selected beneficiaries to and the external environment. The account for shocks in food prices hikes, medium-term growth outlook is subject additional health expenditures and to significant uncertainty and risks are temporary loss of employment. The to the downside. On the external side, PSSN households should be exempted we assume that external demand from from having to comply with the advanced economies rebound, including program’s conditionalities, especially for tourism and other exports, and that school attendance and health check- the global health crisis is contained, ups, considering that schools are closed, even in the absence of a treatment or the extraordinary circumstances, and a vaccine. On the domestic side, our given social distancing measures. outlook is conditional on government Providing liquidity to bridge firms’ cash policies that prevent a protracted and disruptions and supporting financial uncontrolled domestic spread of the institutions. The BOT has taken actions virus, and a permanent loss of income such as reducing the discount rate from for vulnerable households and firms, 7 to 5 percent on May 12, 2020 lowering while supporting the recovery of the PAGE 31 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region economy. Therefore, we expect the 2019). However, the rapid expansion economy to rebound to nearly 6 percent is uneven. For instance, the USA, real GDP growth over the medium term China, and other developed countries (Table 4 and Figure 18). This outlook are growing faster than developing is also conditional on attention by countries, widening the digital divide government to improve the business (UNCTAD 2019). In Tanzania, data environment and attract private traffic has been expanding, but not fast investment as well as improve fiscal enough to catch up. Tanzania’s use of management by strengthening revenue international bandwidth, however, is collection and budget execution. only a third of Kenya’s, and retail prices Inflation should remain low as global on low-usage data baskets are among energy prices remain subdued, but the highest in the region. In an effort shortages of basic products could create to enhance social distancing in order additional risks. For the medium term to prevent the spread of the COVID-19, the authorities expect a fiscal deficit of more use of ICT to provide social and 3-4 percent of GDP as both recurrent economic services is key. Services such and capital spending rise because of as education, health, cash transfers, and expenses related to upcoming general payment will increasingly rely on the use elections, additional health spending, of ICT during the pandemic. and an ambitious public infrastructure investment program. The CAD is A full recovery in 2021 and beyond expected to widen to 4-5 percent of requires government attention to GDP over the medium term as growth reforms to improve the business in capital imports for infrastructure environment as a key input to bolster investment outpaces export growth. recovery of the private sector. Even if COVID-19 is fully controlled, it is The digital economy is a key driver unlikely that private investment will of Tanzania’s future growth and rebound strongly and steadily without prosperity, and a key element in the major policy reforms. Although some country’s response to the COVID-19 important reforms to support the private pandemic (Part Two). The ICT sector, sector have been adopted, including the which has been grown by an average of Blueprint for Regulatory Reforms and 13 percent during the past decade can the Strategy to Control Government play a key role in deriving the recovery Arrears, those agendas need to move and future growth of the economy. forward more quickly. Additionally, However, the sector needs support to government urgently needs to identify grow faster and increase its contribution and adopt measures to foster greater to aggregate productivity, job creation, private sector participation in the and poverty reduction. UNCTAD economy. The recent difficulties of the estimates that global internet data private sector and the barriers preventing traffic will grow from 45,000 GB per it from flourishing are recognized. In second to 150,700 in 2022 (UNCTAD the short term the government should PAGE 32 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 7: Possible Actions to Protect Livelihoods Provide cash transfers to High informality implies policies aimed at formal labor vulnerable low-income such as unemployment insurance, reducing payroll households. and income taxes, and extending paid sick leave may have limited effects. Cash transfers can be more straightforward to implement, can benefit from the current system of transfers and mobile banking and reach outside the formal sector, where most of the beneficiaries are likely to be. Provide wage and tax Beneficiaries could include companies in the tourism and subsidies to major exports sector, and suppliers of goods and services to affected sectors to prevent these companies, with a priority on SMEs. For small and bankruptcies and layoffs. medium sized companies, a grant or tax credit equivalent to the previous year’s tax bill may make sense. For larger companies, a temporary tax holiday could serve the same purpose. To curb layoffs, support could be conditioned on maintaining employment or directly subsidize wages of maintained employees. Continue to expedite The priority should be SMEs operating in affected sectors. payments of verified This measure should be accompanied by an accelerated domestic payment arrears verification of remaining claims. and VAT refund. Ramp up health services and A “Public Works Tax Deduction” program would allow facilities by partnering with firms to provide supplies (textiles, food, cement) and the private sector through a build the additional infrastructure (tents or provisional tax deduction program. hospitals). Incurred expenses could be claimed as a future tax deduction, to alleviate Government’s cash flow constraints and prevent reliance on arrears to finance additional health spending. Provide partial relief on Focus of this measure could be on electricity and water utilities for low-income tariffs. These benefits should be temporary, perhaps households. lasting up to two quarters. Increase efficiency of customs Reduce costs and time of documentary compliance to procedures to facilitate the facilitate efficient movement of goods across borders, movement of necessary to ensure the continued supply of medical drugs/ goods. equipment, fuel, and food, as well as intermediate goods needed by industry. PAGE 33 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Provide liquidity to the BoT has already announced reduction of the discount interbank market. rate and lowering banks’ minimum reserve requirements to support adequate funding to commercial banks. It could also broaden access to BoT’s emergency liquidity assistance for commercial banks by expanding assets classes that are accepted and consider temporary easing of its terms. Encourage renegotiations BoT has also recently encouraged commercial banks to of loans and delays in loan thoroughly assess loan repayment difficulties faced by repayment. borrowers due to COVID-19 and discuss loan restructuring on a case by case basis. Careful monitoring by the BoT is needed given banks are given full discretion. Particular focus is needed to protect small businesses. Implement a program of This measure aims at creating additional working capital G ove r n m e nt- g u a ra nte e d for firms in financial distress and consists of direct support loans to the private sector in the form of loan guarantees backed by BoT or a Government fund. Guarantees should be at most equivalent to a multiple of an average month of sales. Only companies with non-performing loans below a threshold could participate. The guaranteed share of the loan could depend on the size of the firm: the larger the firm, the lower the guarantee. aim to: (i) give precedence to paying with regulations by fully implementing verified arrears to private contractors the Blueprint for Regulatory Reform; (iii) and suppliers; (ii) continue to speed improve investment policies for non- up the release of verified VAT refunds; extractive sectors to support economic (iii) ensure that tax administration is diversification. predictable and that tax agents collect taxes from private businesses fairly; (iv) Delays in addressing continued enhance the public-private dialogue unrealistic forecast and shortfalls on the business environment reforms, of budget execution will continue including the preparation of the new to jeopardize completion of major business facilitation and the investment infrastructure projects and clearance laws. In the medium term the of domestic arrears. The government is government should aim to: (i) create a undertaking priority projects in human more predictable business environment; development especially in education avoid sudden changes in policy; (ii) and infrastructure to support growth reduce the high cost of compliance and job creation over the medium PAGE 34 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION to long term. However, if they are to To address these fiscal issues, budget have maximum impact they must be credibility should be improved. In the adequately financed and completed on short term the government should schedule. Shortfalls in financing could aim to: (i) prepare and act on realistic add new domestic arrears to an already budget, with credible revenue forecast unsustainable stock. and borrowing plans; (ii) improve revenue collection to meet the target; Poor management of public (ii) improve budget execution across investments can also create debt the board, but in particular the capital servicing problems, notably currency expenditures; and (iv) clear both the VAT and maturity mismatches. After refund and domestic payment arrears COVID-19, the government should and prevent future accumulation. In the strengthen due diligence of large medium term the government should infrastructure projects to assess their invest in a balanced program of human feasibility and if they can generate capital and infrastructure services by: returns that can be used to service the (i) intensifying mobilization of domestic loans that finance them. If projects are revenue to finance investments, a not properly vetted or completion is major challenge if the economy does delayed, loan repayments scheduled not recover from the COVID-19 crisis; may begin before adequate cash flows and (ii) prioritizing public investments and foreign exchange earnings are that deliver high return and growth- generated. That may cause maturity enhancing impact and manage them and currency mismatches at a time effectively to be delivered on budget when Tanzania’s fiscal space may be and on time. limited by additional spending related to service delivery and support programs. Figure 18: Possible Sources of Recovery in 2021, Contribution to GDP Growth 5.5 Change in Growth Rates: + 3.0 pp 2.5 2.3 1.5 1.5 -0.6 -1.7 2020 Consumption Government Investment Exports Imports 2021 consumption Source: WB staff estimates. PAGE 35 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 2 The Potential Of The Digital Economy PAGE 36 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION 2.1 Introduction The digital economy is a key driver regulatory bodies must be competent of Tanzania’s future growth and to enforce them. Global tech giants prosperity, and a key element in the looking to invest in Africa seek certainty country’s response to the COVID-19 and consistency across jurisdictions. pandemic. Globally, driven by data, the digital economy has been growing Building online trust depends on rapidly. UNCTAD estimates that global what governments and firms do. internet data traffic will grow from Governments need to use online 45,000 GB per second in 2017 to 150,700 platforms, make payments using mobile in 2022 (UNCTAD 2019). However, the money, and show that the online rapid expansion is uneven. The USA, environment is secure and easy to use. China, and other developed countries Canada’s Digital Charter, for example, are growing faster than developing states that “the way forward on data countries, widening the digital divide collection, management and use must (UNCTAD 2019). be built on a strong foundation of trust and transparency between citizens, Data traffic in Tanzania has been companies and government” (Canada’s expanding, but not fast enough to Digital Charter 2019). catch up. Data usage on Airtel’s network, for example, grew by 52 percent in 2019 The components of a digital economy alone. Tanzania’s use of international for Tanzania are shown in Table 8. bandwidth, however, is only a third of Red shows what needs to be addressed Kenya’s, and retail prices on low-usage urgently and orange indicates progress data baskets are among the highest in but also a need for strategies. the region. Expanding the digital economy is dependent upon the interaction of digital platforms but also on legislation. Digital platforms allow interaction online and include elements of payment, identification and connectivity. Platforms can only succeed, however, if they are able to earn trust —for the digital economy to function efficiently, consumers need to know they are protected online. In other words, the laws must keep up with technological developments and PAGE 37 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 8: Components in Assessment of the Digital Economy Components Assessment Status First Mile High prices have resulted in lower usage. Regulatory and political obstacles prevent Middle Mile investment and network rollout. Inaccurate data on network coverage Connectivity Last Mile undermine planning. High prices on usage Platform baskets of 5GB and below limit usage. Regulatory interventions are poorly Enabler Invisible Mile implemented and can have a negative impact on usage. National IDs Implementation problems with the National ID ID Platform Passport mean that a more flexible approach is needed Driver’s License that incorporates other forms of identification. Bank Accounts Use of mobile money is relatively low. Payment Credit Cards Strategies to reduce transaction fees to zero for Platform Mobile Money small amounts should be considered. Trust Laws and Data Protection No data protection law has been passed. Building Regulations Consumer Need for an independent Consumer Protection Protection Act. Current implementation reduces rather than Cybercrime supports trust in digital trade. Intellectual Not clear if IP can be protected. Property Registration requirements should be expanded Electronic to include recognition of providers authorized Transactions in other jurisdictions. Dispute No online dispute resolution system is Resolution available. Enforcement This is the responsibility of the police, but no Mechanisms Cybercrime specific division has been created, leading to Enforcement the possibility of weak enforcement. Digitally Data show opportunity for expansion of digital Delivered trade. Digital trade exports have been declining Imports for the past few years. Reasons for the decline Trade Digitally need to be investigated and addressed, Digital Delivered especially in light of the reduction in physical Economy Exports trade due to COVID-19. Contribution to Tanzania can make better use of the digital Economic GDP economy to drive growth, productivity and job Jobs creation as a response to COVID-19. Source: World Bank staff. PAGE 38 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION A number of useful facts flow from 2.2 Tanzania’s Digital Economy this digital assessment. On the connectivity front, in Tanzania high- There is no universally accepted volume data products (10GB and definition of what constitutes the greater) are among the cheapest in digital economy. One (narrow) definition East Africa. The country is connected is the share of GDP that information to three international undersea cables. and communications technology (ICT) Halotel, a new market entrant, has accounts for (Government of Kenya, rolled out large amounts of fiber to rural 2019). An alternative definition is that areas. Among positive developments the digital economy is “That part of on the legal front, electronic evidence economic output derived solely or is formally recognized; there are default primarily from digital technologies rules related to sending and receiving with a business model based on digital messages; e-Government services goods or services” (Bukht and Heeks are enabled; and online auctions are 2017). Generally, the digital economy recognized. However, if the digital is understood to comprise a broad economy is to expand rapidly, there range of economic activities; it is not a are a number of interventions the separate sector but represents the value Government of Tanzania can consider, added by the use of digital technologies which are detailed in the rest of this in all sectors. To be measured accurately chapter. These include: in national accounts, it thus requires a separate account. • Removing regulatory obstacles to private sector investment and After making a relatively early start middle mile network rollout; to market liberalization, Tanzania has recently been slipping behind • Requiring operators and the TCRA other countries in the region and has to publish digital coverage maps for been backtracking on private sector 3G and 4G as well as for fiber; participation. The partial privatization of TTCL in 2001 was reversed in 2017, • Devising a regulatory digital for instance, and the Government has roadmap in order to support digital increased its stake in Airtel. On the ITU’s trade; and ICT Development Index (IDI), Tanzania’s • Developing mechanisms to facilitate ranking has slipped from 139th in 2011 the use of mobile money and to 165th in 2017.9 On the World Bank’s to make low value transactions Digital Adoption Index (DAI), Tanzania cheaper for customers. has a score of 0.34, which is above that of Ethiopia (0.27), the same as that of Uganda (0.34), but below that of Rwanda (0.43) and Kenya (0.45). Among the components of the DAI, 9 ITU. 2017. Measuring the Information Society. PAGE 39 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 19: Digital Economy Framework Source: World Bank Group, Digital Economy for Africa initiative (2019). Tanzania is doing better on Government looks at how these five pillars and usage (0.57) than on business (0.28) or cross-cutting themes currently shape citizen usage (0.17).10 up in Tanzania. The recommendations identify areas where the Government In its work on the Digital Economy of Tanzania can act to grow its digital for Africa initiative, the World Bank economy. Group has adopted a five-pillar model of the digital economy that covers Digital Infrastructure Digital Infrastructure, Digital Financial Services, Digital Entrepreneurship, A country’s digital infrastructure, Digital Platforms, and Digital Skills and or connectivity, is the foundation Literacy (Figure 19). This is built on of its digital economy. High quality an “enabling” framework (regulatory, infrastructure, competitively provided, legal, fiscal, etc.) that encourages a can ensure that digital services are digital economy to thrive. It requires affordable and accessible. The network “trust-building” to develop the demand effects associated with connectivity side, by addressing risks related to require volume and this is only possible if cybersecurity, data protection, etc. It digital services are universally available, also addresses cross-cutting themes, affordable and accessible. This, in turn, such as gender and disability. These in accelerates usage and the rollout of turn drive “usage” which measures the infrastructure, such as fiber and mobile size and growth of the digital economy base stations that support digital and promotes digital trade. This report services. Each of these factors relies on a market structure that supports fair 10 World Bank. 2018. Information and Communication for competition. Development: Data-driven Development PAGE 40 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 9: Weighted Prices for internet bandwidth, 2019 Q2, US$ $/Mbit/s per month Johannesburg 3 Lagos 5 Nairobi 5.25 Accra 8.1 Kampala 10 Dar es Salaam 15.5 Note: Weighted Median price for 10 GigE IP Transit. Source: Telegeography 2019b. Table 10: International internet bandwidth by country (Mbit/s), 2015-19 Country 2015 2016 2017 2018 2019 CAGR Kenya 177,347 280,114 460,069 670,931 930,576 39% Rwanda 9,820 16,275 45,782 68,095 117,075 64% Tanzania 86,122 120,339 166,913 215,816 292,816 28% Uganda 36,689 40,925 89,495 186,327 224,627 44% Source: Telegeography 2019a. First mile: where the internet enters countries—it may now be falling further the country behind (Table 10). On the positive side, the surplus capacity on undersea cables The connectivity for the first mile11 is means that Tanzania is in a good position typically an undersea cable or fiber from to increase its international bandwidth another country, with satellite as back- to response to the current COVID-19 up. For Tanzania, pricing is a particular pandemic, which is boosting demand challenge. Dar es Salaam is one of for international traffic as government the most expensive cities to procure and the private sector moves towards international internet bandwidth. The remote working. price for international bandwidth in Dar es Salaam, for example, is significantly Middle Mile: The backbone network more expensive than in Johannesburg or of a country Lagos (Table 9; Telegeography 2019b). The middle mile includes national One consequence of these high prices transmission lines (typically fiber but is that international bandwidth is also microwave) and one or more underutilized. Tanzania is connected Internet Exchange Points and data to three international undersea cables, caches, such as content distribution only one fewer than Kenya, yet uses networks (CDNs). Content providers only a third as much international like Facebook, Google, and Amazon are bandwidth. From 2015 to 2019 the the behemoths of this industry, and compound annual growth rate (CAGR) increasingly they are building or leasing for Tanzania’s international bandwidth their own networks, data centers, and was also the lowest of comparator CDNs. It is estimated that between 2014 and 2018 international capacity 11 See World Bank 2016 (Chapter Four) for more detail on the analytical framework adopted for this section. PAGE 41 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 20: Google Has Edge Figure 21: Facebook Has CDNs in Zambia, Points in Kenya and Uganda Rwanda, Burundi, Uganda, and Kenya Source: https://peering.google.com/#/infrastructure Source: https://anuragbhatia.com/2018/03/networking/ isp-column/mapping-facebooks-fna-cdn-nodes-across-the- world/ deployed by content providers rose over functions as an Internet exchange point. 8-fold, to 530 Tbit/s (Telegeography Carrier-neutral data centers offer more 2019b). Content providers now use more alternatives for routing and generally international capacity than traditional more flexibility, thereby keeping local telecom carriers. data local. A carrier-neutral data center13 has numerous economic benefits of Tanzania has several data centers, which Tanzania cannot currently take mostly located in Dar es Salaam; advantage. Vodacom and Tigo12 both operate their own. The government of Tanzania So-called “over-the-top” (OTT) also has a data center, built by the service providers like Google and 14 China International Telecommunication Facebook have CDNs in neighboring Construction Corporation (CITCC) and countries but not in Tanzania (Figures funded by a loan to Tanzania from the 20 and 21). This means Tanzanian users Chinese government (Lima 2016). are missing out on lower latency, faster However, the country currently has downloads, and a generally better user no carrier-neutral data centers (i.e., experience. This is a further reason why data centers that are independent of Internet usage is lower in Tanzania than a major carrier or content provider), in neighboring countries. and not does it have any large CDNs from the main content providers 13 See Grant Thornton, https://www.idaireland.com/ newsroom/publications/ida-ireland-economic-benefits- like Facebook, Google, Amazon or of-data-centre-inves and Oxford Economics, https:// Netflix. CDN customers can exchange www.oxfordeconomics.com/recent-releases/d8d830e4- 6327-460e-95a5-c695a32916d9 traffic locally and thus the center also 14 The term “over-the-top” refers to services that run over telecom networks and offer telecom-type services like 12 https://www.tigo.co.tz/data-centre-and-colocation- voice calls or messaging without billing them separately; services they in fact often free. Examples are WhatsApp and WeChat that compete with SMS from telcos, and Skype or Viber that compete with fixed and mobile voice calls. PAGE 42 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 11: Population within Reach of Fiber Transmission Networks Compared, Percent Tanzania Kenya Uganda Up to 10km 14 32 33 Up to 25km 15 45 40 Up to 50km 25 16 21 Source: ITU 2019. Fiber backhaul15 in the middle mile in Dar es Salaam, Dodoma, Morogoro, network is central to expanding Mwanza and Arusha. However, they 3G and especially 4G coverage in were prevented from building inter- the access network (the last mile): city fiber. Eventually an agreement 4G supports higher speeds, greater with Government, under which the capacity, lower latency, and—especially Consortium is required to hand over 50 important for mobile operators—lower percent of capacity as well as ownership operating expense compared to 2G of the fiber to Government. This is a and 3G networks. Thus, the distance deterrent to private sector investment between a cell tower and the nearest and consequently only 1’500 km fiber is crucial in determining the of backbone fiber was constructed internet speeds users can enjoy. between major cities. Tanzania has seen significant As a consequence of these investment in fiber backhaul, but not restrictions, fiber rollout and pricing all operators have been able to provide are a challenge. Apart from Halotel, their own fiber. Halotel has reportedly which has a “sweetheart” agreement built about 18,000km of cable and has with the government granted when it committed to connecting 850 public was licensed in 2015, only the NICTBB institutions to fiber (Kabendera 2015). is allowed to build inter-city networks. By contrast, the National ICT Broadband Furthermore, Halotel is not allowed to Backbone (NICTBB), which is operated resell capacity on its fiber network to by the state-owned operator, Tanzania other operators and Internet service Telecommunications Corporation Ltd providers, who are obliged to purchase (TTCL), has only 7,500km of fiber cable, from NICTBB. Intra- and inter-city fiber despite having been in the market networks are also subject to excessive several years longer than Halotel. The rights of way (RoW) charges imposed other major operators - Airtel, Tigo, by the Tanzania Rural and Urban Roads Vodacom and Zantel but excluding Agency (TARURA). The Fiber Consortium Halotel - formed the Fiber Consortium has stopped any further rollout pending and constructed 400km of metro fiber negotiations with government over proposed RoW and regulation. 15 Fibre backhaul refers to the link between the core network and the edge of the network. Backhaul can also be microwave, but fibre has inherent advantages, especially in dense urban settings where capacity could be constrained. PAGE 43 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region The cost of civil works is exorbitantly the routes. In particular, the lack of high. TARURA has imposed a RoW digital maps of fiber laid make it difficult charge for laying fiber, whether above for users sensitive to connectivity or below ground, of US$1,000 per km requirements to make informed location and also an annual charge of US$1,000 decisions. per km. This is an order of magnitude higher than any other utility charge, Tanzania’s low usage of international such as water or sewage pipes or even bandwidth, and a lack of CDNs, imply copper telephone wires (Annex 14). low domestic usage. It is unlikely that RoW charges are also much higher Tanzania has more widespread national than in neighboring countries, and the transmission networks than indicated recurring annual charges are especially in Table 11 because Tanzania uses a punitive (Annex 15). third less international bandwidth than Kenya, even though it has about 10 Tanzania’s RoW costs are much million more people. higher than other countries in Africa. Typically, about 60 percent of the total Last mile: The last mile, or access cost for fiber rollout is for construction, network, refers to how users reach the permits, and design (Deloitte 2017). In internet. Tanzania, even before the RoW charges Issues like affordability, access were imposed, these costs were close for consumers, usage, and retail to 80 percent.16 The effect of the high competition are important for RoW charges is to limit fiber rollout and determining user experience. They can automatically exclude all but the largest be analyzed by using the mAccess Tool cities, which are already relatively well- (RIS 2019), developed by Research ICT served. As demand for data increases Solutions, as a diagnostic tool (Annex (especially as a result of the COVID-19 16). mAccess compares performance pandemic), microwave in the backbone across five dimensions: affordability, will need to be replaced by fiber. High access, usage, infrastructure, and fiber prices mean that upgrades from competition. microwave backhaul to fiber will also be delayed, likely adding to higher Affordability congestion and lower speeds on mobile broadband networks. This may further Tanzania is no longer the cheapest delay deployment of 4G in mobile market in East Africa for small data networks. baskets. Prices for 100MB, 500MB, and 1GB are generally more expensive The public availability of data on there than in comparator countries. national transmission networks is For instance, a 100 Mb basket is three poor. For instance, there is no way to times more expensive than in Uganda confirm Halotel’s claim to have rolled and Kenya (Table 12). In contrast, high- out 18,000km of fiber cable, or to track usage baskets (more than 10 Gb) in 16 Interview. PAGE 44 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 12: Mobile Data Basket Prices Charged by Dominant Operators, 2019 Q4, US$ 100MB 500MB 1GB 2GB 5GB 10GB 20GB Kenya 1.46 2.58 4.14 4.88 9.76 19.52 28.99 Mozambique 0.48 1.68 2.52 4.20 7.94 15.89 31.77 Rwanda 1.07 2.15 2.15 4.29 9.20 10.73 21.47 Tanzania 4.35 4.35 4.35 5.59 13.05 15.22 21.74 Uganda 1.49 2.30 4.07 5.42 9.22 13.55 23.23 Source: RIS 2019. Red indicates the most expensive. Tanzania are competitive, though still favorably with its neighbors (Table 13). not the lowest. While this might be good for business customers, prices However, 4G population coverage are generally too high for the average trails neighboring countries despite consumer. Relatively high taxes in all the investment in networks. This Tanzania push affordability further out may be because the government has of reach for poorer users. been slow in awarding 4G spectrum licenses, or it may reflect an attempt Since a price war among mobile by operators to first redeem their 3G operators ended in 2018, prices have network investment. gone up steadily. Major operators complained that the price war depressed Usage investment in the sector.17 The price war Mobile voice traffic has been rising ended in Q1 2018 and in Q2 2018 Tigo steadily, in part because the user base and Airtel’s decision to raise prices was expanded from 34m subscribers in soon followed by Vodacom. 2014 to over 47m in 2019 (Table 13). Access Operators claim that OTT applications like Skype or WhatsApp have reduced Halotel’s entry into the market in voice revenue and thus operator October 2015 had a major beneficial profits—even though voice traffic has impact on access in Tanzania. Its entry been increasing steadily (Table 15). It is and the resulting competitive pressure more likely that OTTs have spurred data reportedly pushed 3G population growth in parallel with the increase in coverage from 20 percent in 2015 voice traffic. Q3 to 61 percent in 2018 Q4. In 2017 Halotel invested around US$100 million Data customers and revenues have in network expansion (Telegeography also been increasingly steadily. 2017a). Competitors reacted: Tigo Although the regulatory authority, the invested US$76 million in 2016 and Tanzania Communications Regulatory US$70 million in 2017 (Telegeography Authority (TCRA), does not report data 2017b), and Vodacom invested US$63 usage or subscribers by operator, some million in 2017 and US$67 million in data are available from Vodacom, the 2018 (Vodacom 2018). As a result, 3G only operator that reports data usage for coverage in Tanzania appears to fare Tanzania (Annex 17). Vodacom’s slower 17 Based on field interviews. PAGE 45 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 13: Population Coverage in 2019, Percent Tanzania Uganda Kenya Rwanda Mozambique 3G 85 65 85 93 40 4G 13 17 25 89 Unknown Source: GSMA, 2019. Table 14: Internet users and mobile communications subscribers, 2015-19 2015 2016 2017 2018 2019 CAGR Internet users 17,263,523 19,862,525 22,995,109 23,142,960 25,794,560 29.9% Mobile 39,665,600 40,044,186 39,953,860 43,497,261 47,685,232 24.0% subscribers Note: CAGR = Compound Annual Growth Rate. Source: TCRA, 2019. Table 15: Voice Traffic, 2014–19 2014 2015 2016 2017 2018 2019 Traffic (on-net and off-net) million 41,689 43,461 51,024 56,054 62,227 67,383 minutes Year on Year (% change) 4.3% 17.4% 9.9% 11.0% 8.3% Source: TCRA, 2019. than expected growth may be due to Other sources also indicate coverage Airtel’s 4G rollout in 2019: Airtel has may be much lower than officially reported that data revenue accounted reported. The GSMA’s own mobile for 25.8 percent of total revenue in coverage map for Tanzania (Figure East Africa (Airtel Africa 2020). Though 22)19 is very similar to the map from voice revenue dipped in the first two OpenCellID and RIS (Figure 23). There quarters of 2019, it has since rebounded are few sources of accurate information (Annexes 18 and 19). about coverage. Of the major operators, only Airtel provides a map (Airtel 2019); Cellular coverage its 3G coverage map is very similar to Though 3G coverage is high, usage is that in Figure 27, suggesting that both relatively low. Public data based on cell 3G and 4G coverage in Tanzania are locations18 (Table 16) shows considerably significantly overstated—so achieving lower penetration than reported by universal service may be much more the International Telecommunication difficult than was previously estimated. Union (ITU), which is based on TCRA Invisible mile: soft or hidden issues data, or the Global System for Mobile that affect infrastructure rollout. communications Association (GSMA) Intelligence Unit, which is based on The “invisible mile” includes policies, operator reports (excluding Halotel, laws, regulations, and how they are which is not a GSMA member). all enforced. In general, competition 18 Cell location data are from OpenCellID, www.opencellid. 19 https://www.mobilecoveragemaps.com/map_tz#7/- org . 6.599/35.673. PAGE 46 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 16: Coverage Estimates Based on Cell Locations Population Coverage Population Covered (%) 3G coverage 25,426,283 47.6 4G coverage 14,361,449 26.9 Total pop 53,463,974 Source: RIS calculations based on OpenCellID. Figure 22: 3G Coverage Figure 23: 4G Coverage Source: OpenCellID and RIS,2019 Source: OpenCellID and RIS, 2019 in Tanzania is strong. With the entry reduced from 60 to 51 percent and the of Halotel in October 2015 prices were government stake increased from 40 to quickly reduced and access improved. 49 percent.20 With the dispute resolved, Today Vodacom has a 33 percent Airtel began rolling out its 4G network, market share, Airtel and Tigo around but the agreement arguably reduced 26 percent each, and Halotel, the new competition, as the government also entrant, about 10 percent (Figure 24). has a stake in TTCL, an Airtel competitor. Three operators, Zantel, Smile, and TTCL, account for the remaining 5 per An August 2019 report highlighted cent. the risk of tying registration for subscriber identification modules Regulation and politics affect the (SIM cards) to national identification market. For instance, Airtel temporarily cards. While national ID registrations halted investment pending resolution had been increasing, penetration was of a dispute with the government over still only 46-55 percent, so that millions ownership of its Tanzanian subsidiary. of Tanzanians could be barred from The dispute was resolved only in cellphone networks. In fact, Vodacom January 2019, with Airtel’s stake being Tanzania has reported that 20 Telegeography, 2019a. PAGE 47 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 24: Mobile communications Digital Financial Services market shares, 2019 Like connectivity, payment platforms depend on network effects. Payment options are income- sensitive. Credit cards require checking accounts and a credit history. Though bank account penetration is higher than credit card penetration, most online transactions do not accept payments from bank accounts. Mobile money has the highest penetration and therefore benefits the most from network effects. The mobile payment platform is a lead driver of Source: TCRA digital technology because it supports e-commerce, cross-border payments, “On 20 January, the TCRA directed and other services, such as welfare that customers be barred in phases, payments, conditional cash transfers, which led to the barring of 1.7 million and other benefits associated with customers from 20 January to 31 January. financial inclusion. A study by McKinsey As at 31 January 2020, some 5.0 million (Tyson, 2016) estimated that higher customers remain non-biometrically financial inclusion may increase GDP registered. These customers will be by up to 12 percent for countries where barred on TCRA’s instruction, until such financial inclusion and digital payments time that the biometric registration are underdeveloped. is concluded for these customers Mobile money is currently the (Vodacom 2020).” only viable way to extend financial Poorly applied regulations slow inclusion in the digital economy. development of Tanzania’s Penetration of traditional banking (credit digital economy. The impact falls cards and bank accounts) is far too low disproportionately on the poor. This to affect financial inclusion (Table 17), underscores the need for both rigorous but mobile money is generally a success impact assessments (including story. In 2013–18, active mobile money unintended consequences) of regulatory subscribers doubled, mobile money decisions and an integrated regulatory agents tripled, and transaction value strategy (in this case between SIM card more than quadrupled (Table 18). In registration and national ID enrollment) the same period, the number of mobile if the digital economy is to grow. subscribers rose from 27 to 43.5 million and mobile Internet users from 7.5 to 22.3 million. PAGE 48 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Table 17: Bank Accounts or Credit Cards, Tanzanians 15 Years or Older, 2017, Percent Rural Urban Male Female Total Do you have a credit card or debit card? 2.8 14.9 7.2 6.2 6.7 Do you have access to a bank account? 5.1 23.4 12.7 9.7 11.1 Source: Nationally representative surveys from Research ICT Africa. Table 18: Mobile Money Statistics, 2014–19, Year end 2014 2015 2016 2017 2018 2019 Change (%) Active users (million) 13.86 19.01 17.03 19.38 23.3 23.96 11.6% Mobile Money Agents 238,461 270,974 371,132 427,445 483,283 560,043 18.6% Monthly Mobile Payments 3,570 4,762 5,342 6,639 7,648 8,213 18.1% (TZS Billions) Note: CAGR = Compound Annual Growth Rate. Source: BoT. 2019 statistics for November; all other dates for December. Nevertheless, few Tanzanians use 5 percent had been unable to replace mobile money. More than half of their phone after it had been stolen. respondents in a December 2017 survey Constraints on cell coverage and lack of stated they rarely used it, and fewer electricity prevented a further 4 per cent than a quarter use it monthly. There is from acquiring a phone (Figure 25, right also a large urban-rural gap in usage, as panel). Age is also a big differentiator well as a gap by gender and age group. with only 5-6 percent of those aged over The urban/rural divide is exacerbated 50 owning a smartphone compared also by wealth gaps. For the poorest with four times as many people in their 20 percent of the population, the gap 20s. between smartphone ownership among urban and rural population is only 4 High costs for small transactions percentage points, but this increases deter usage, proving once more to 24 percentage points amongst the that it is expensive to be poor. Thus, richest quintile. By contrast, for women, mobile money is used less for small smartphone ownership is generally only payments and transaction histories around 3 per cent lower than for men, are incomplete. Low, or even zero, and this is not much affected by wealth transaction fees, as in Somalia (World differences (Figure 25 left panel). Bank 2017), could super-charge mobile money usage. Without fees, mobile Yet, affordability is the main problem. money could be used far more, e.g., Some 36 per cent of respondents to for financial intermediation, spurring the survey reported that they could not product innovations (Comninos et al. afford a mobile phone, and a further 2009). Another option might be M-Pesa PAGE 49 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 25: Smart Phone Ownership, Between Urban and Rural Areas, and Between Men and Women, By Income Quintile, 2017 Source: World Bank (2020a) Household survey findings on mobile phone adoption: Has the digital revolution come to Tanzania? Note: The analysis is based on respondents that reported owning a smart phone and is divided by quintiles, ranging from the poorest 20% to the richest 20% of the population. Sample size: 5,636 individuals Figure 26: Mobile phone ownership, by age group, and reasons for not owning a phone, 2017, Percent Source: World Bank (2020a) Household survey findings on mobile phone adoption: Has the digital revolution come to Tanzania? Note: Left chart based on all respondents aged 15 and above who claim to own a phone. Right chart based on all respondents who do not own a phone. Total sample size: 5,636 individuals. Kenya’s Kadogo product21, where small The case of Somalia is instructive: while transactions were free. Safaricom has transaction charges are zero, mobile recently waived fees on transactions money operators profit from interest below US$10 (KES 1’000) in response on the “float,” (i.e., the uncashed out to the Coronavirus pandemic.22 (Box 3). balance held on mobile phones). Users 21 https://www.safaricom.co.ke/sustainabilityreport_2018/ ebook/54/ 22 https://www.standardmedia.co.ke/article/2001364470/ safaricom-removes-fees-on-m-pesa-transactions-below- sh1000. PAGE 50 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Box 3: How Digital Technologies are part of the armory for Coronavirus response In this unprecedented fight against COVID-19, digital technologies offer an opportunity for governments, individuals and businesses to cope with social distancing, ensure business continuity, and prevent service interruptions. How should Tanzania respond to this new environment? These objectives could help shape the policy response: • Objective 1: Increasing bandwidth and managing congestion to keep the internet from “breaking” As more and more people are obliged to stay at home, and as Government itself moves towards home-based working, the volume of traffic on operator networks is rising in an unexpected way. This calls for changes in network configuration, traffic management, and access to spare capacity (dark fiber) in infrastructure to provide connectivity to institutions, households and SMEs. In South Africa, for instance, the regulator has made available High Demand Spectrum (sub 1GHz, 2.6GHz and 3.6GHz) on a temporary basis to all major operators until November 2020 so that they have extra capacity to deal with demand. In the case of Tanzania, the government could consider scrapping the restrictions that currently prevent telecom operators from constructing their own networks, and accessing international bandwidth directly. • Objective 2: Ensuring the continuity of public services to safeguard the welfare of populations As use of digital technologies becomes the “new normal” for work, schooling, and government services, there is a risk that those communities without unrestricted and affordable internet access could be left behind. Telecom operators in Tanzania are also subject to regulatory restrictions, taxes and fees that deeply affect the cost of service provision. This calls for special packages to reduce costs for the end users and ease the financial pressure on internet providers during the current crisis. • Objective 3: Powering FinTech to support the most impacted businesses and communities Economies are increasingly relying on online financial services to stay afloat, and demand for services such as mobile payments, food delivery, and e-commerce shopping will grow exponentially. This calls for action to connect the unconnected by providing emergency broadband infrastructure, particularly in hard-to-reach areas. The World Bank’s pipeline Digital Tanzania program (P166760) seeks to address this by extending internet connectivity to government ministries, departments and agencies across the country and mobile broadband to rural areas. PAGE 51 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region in Somalia rarely cash out their mobile A more flexible system that recognizes money balance because of a lack of other forms of ID is worth considering. confidence in the local currency. However, Ironically, SIM cards are a more pervasive operators do charge transaction fees for form of ID than national ID, though bulk payments, such as salary or social national ID is now enforced in Tanzania safety net transactions. for SIM card registration. While nearly 90 percent of Tanzanians have some Digital Platforms form of ID; national ID penetration is far There is a symbiotic link between a lower (Table 19). An interim measure country’s payment and identification for SIM card registration, such as platforms. Being able to cheaply and using voter registration cards, should accurately identify individuals makes be considered while the government financial inclusion easier and supports addresses enrollment problems with a wider range of services, among them national ID. tax collection and welfare payments. It The combination of connectivity, is also more efficient and cost-effective payment systems, and ID enrollment because it reduces practices like ghost facilitates economic growth. Together, employees, a major concern for the they drive the digital economy, government (Ng’wanakilala 2016). employment, and GDP growth. In 2016 While the national ID system has mobile operators alone contributed over improved, it is still far from inclusive. US$2.5 billion in Tanzania, equivalent By year end 2018 penetration had risen to 5.2 percent of GDP, and the amount from less than 9 percent in 2016 to about is likely to have risen since with the 55 percent (Malibiche 2018). However, rise in mobile subscriptions (GSMA reaching the remaining 45 percent will 2019). Expanding that to include the be far more difficult. whole digital ecosystem confirms that digital technologies are one of the most important sectors in the Tanzanian economy. Table 19: Tanzanians 15 Years or Older, with a National ID or Passport, 2017 Rural Urban Male Female Total ID (incl. voter registration cards) 87.0 93.0 87.9 90.0 89.0 National Passport 0.0 2.5 0.8 0.9 0.8 Source: Nationally representative surveys, Research ICT Africa PAGE 52 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Enabling Trust Online Government can facilitate digital There is a danger that current trade by ensuring trust in online regulations could sometimes be used transactions. This can be achieved to stifle dissent rather than enable in part by creating a regulatory trust. The Tanzanian Cybercrime Act environment in which digital trade No.14 of 2015 shows progress toward can flourish. Table 20 illustrates the filling regulatory gaps, but it seems to minimum regulatory and enforcement have become a tool to reduce freedom requirements to enable consumers of expression and dissent rather than and suppliers to enter into agreements to ensure that suppliers and consumers online with confidence. That depends can be assured that digital trade will be not only on the relevant laws but also on fairly policed.25 In particular, the country’s how effectively they are enforced. failure to create a data protection law that would protect the privacy and data Tanzania is still missing crucial laws. of individuals means that the Cybercrime For instance, it does not yet have a Act lacks the checks and balances that a data protection law and trails regional Data Protection Authority could bring: neighbors in drafting a law to protect most data protection laws automatically the privacy of individuals. This is a major amend previous laws to ensure that data problem in fostering the trust required privacy is respected. There should be a to stimulate digital trade. Consumer natural tension between privacy on the protection provisions so far enacted in one hand and cybercrime and policing other laws are insufficient. The 2015 on the other; the lack of one part can Electronic Transactions Act contains produce a lopsided result. some provisions to protect consumers, but not enough to cover a variety of Enforcement is generally weak. The likely scenarios. One alternative would 2015 Cybercrime Act has expanded be for Tanzania to transfer those the penalties for infringement of provisions to a more comprehensive online intellectual property, which new Consumer Protection Act23 that is will presumably apply mostly to more comprehensive. The proposed copyright infringement. Section 24 act could also create a regulatory body of the Cybercrime Act No. 14 of 2015 to deal with consumer disputes and makes it an offense to use a computer champion consumer rights.24 system with intent to violate intellectual 25 March 2017: article19.org, “Cybercrimes Act upheld in further blow to free expression”, https://www.article19. 23 Like the Consumer Protection Act of South Africa and the org/resources/tanzania-cybercrimes-act-upheld-in- United Kingdom. further-blow-to-free-expression/ accessed on 06 March 24 Like the National Consumer Commission of South Africa 2020. (http://www.thencc.gov.za) and the United Kingdom Office of Fair Trading, (which closed in 2014 but its responsibilities were assumed by other regulatory bodies. PAGE 53 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 20: Digital Trade Legislation in Tanzania Topic Law / Enforcement Agency Status Laws and Data protection None Regulations Consumer protection Electronic Transactions Act no. 13 of 2015 ss28-32 Cybercrime Cybercrime Act No.14 of 2015 Intellectual property Cybercrime Act No.14 of 2015 §14 Electronic transactions Electronic Transactions Act No. 13 of 2015 Enforcement Dispute resolution None Mechanism Contract enforcement Tanzania Communications Regulatory Authority Cybercrime enforcement Police (no particular division created) Legend: A red traffic light shows a requirement that needs to be addressed urgently. An orange traffic light indicates that there is progress, but new strategies are needed. A green traffic light would indicate that there is no major obstacle. Source: RIS 2019. property rights.26 In practice the success • Cryptographic providers operate of intellectual property protection globally and provide services from tends to be intricately related to the diverse locations. Requiring them enforcement of the law, rather than its to register (with making failure to do existence. Thus, it is possible to have so a criminal offense) has a chilling excellent intellectual property laws, effect on providers who might but failure to enforce them means offer Tanzanian consumers a cost- consumers and suppliers will not have effective service. the trust they need to transact business online in Tanzania. • Setting technical standards that a cryptographic provider must Registration requirements are adhere to is a further barrier to diluting trust. As in some other entry, particularly for a provider jurisdictions,27 Tanzania’s approach to has already complied with the electronic signatures is to require that standards of, e.g., Germany. It would cryptographic providers register in order be helpful if the TCRA would simply to provide such a service. However, the approve the standards of other requirement to register and comply with countries (on a mutual basis) that TCRA standards is problematic from would encourage providers in those two perspectives: countries to expand their offerings into Tanzania. 26 Committing this offense on a commercial basis will result in a fine of TZ 20 million shillings, 5 years imprisonment, There are positive developments: It is or both; doing so on a noncommercial basis results in a fine of TZ 5 million shillings, three years imprisonment, or very encouraging that the legal system both. The Cybercrime Act does not define ‘commercial.’ is allowed to accept electronic evidence, 27 For example, In South Africa an ‘advanced electronic signature’ is only acceptable if it has been accredited by that there are default rules for sending the regulatory body, and accreditation is a serious barrier to supplier entry. and receiving messages, and that PAGE 54 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION eGovernment services are enabled and Higher broadband penetration should online auctions recognized (amongst raise GDP. When applied to Tanzania, many other indicators). However, over five years a factor of 1.23 percent the real test comes when electronic in additional GDP growth for 10 percent evidence is actually accepted in dispute higher broadband penetration (the resolution and court proceedings. The average for studies cited in Table need to reduce electronic evidence 28), would bring in TZS 7.38 trillion to paper form not only reduces the (US$3.19 billion) in additional GDP. amount of evidence before the court (by Higher GDP would also bring in more removing meta-data), it also makes the tax revenue. The same 10 percent process cumbersome and inefficient. It increase in broadband penetration is not clear that Tanzanian courts have would generate an additional TZS 96.6 the human and technological capacity billion (US$41.8million) in tax revenue. to meet the intention of the Cybercrime The government should plan to grow Act. broadband use if it wants to reap the tax benefits of increased economic growth. 2.3 The Digital Economy as an engine of growth Government policy supports investment in the digital economy. The link between broadband Tanzania Development Vision 2025 penetration and GDP growth is well- states explicitly that the ICT sector established. The ITU lists a range should be “harnessed persistently in of studies that measure the macro all sectors of the economy” and that economic effects of mobile broadband demands “adequate investments” penetration (ITU 2012). The effects, (United Republic of Tanzania 2016). The which vary by country and time National ICT Policy of 2016 emphasizes period, range from 0.8 to 1.5 percent the role of the private sector in financing of additional GDP growth for a 10 ICT infrastructure (URT 2016) and the percent increase in mobile broadband design of “collaborative frameworks penetration (Table 21). between ICT investors and Government.” (URT, 2016). Table 21: Reports on Increased Broadband Penetration and GDP Growth Authors Countries GDP Growth (%) Czernich et al 2009 OECD, 1996-2007 0.9-1.5 Koutroumpis 2018 OECD, 2002-16 0.82-1.40 OECD 2013 EU countries, 1980-2009 1.1 Qiang et al. 2009 Low income countries 1980-2006 1.28 Scott 2012 Low income countries 1980-2-11 1.35 Average 1.23 Source: RIS 2019. PAGE 55 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Digital skills and literacy market (World Bank 2016): less-skilled people are shifted out of the market in An economy based on research favor of middle-skilled people who are and development, knowledge and now competing for the lower- skill jobs innovation, creates employment in that are still available. hi-tech sectors. The corollary is that a knowledge-based economy creates Low-skilled workers are the most less employment in low-tech sectors, likely to bear the costs of the move to especially manufacturing and services. greater automation. Arntz et al (2016) For example, AirBnB is now the largest found that automation and digitization hotel company in the world yet owns may put 9 percent of jobs in Europe at few assets and is based on a business risk, but that is not as dramatic as some model that requires considerably fewer other studies (Pajarinen et al. 2014) that employees than a traditional hotel (Piva estimated that 35-60 percent of jobs and Vivarelli 2017). may be at risk. Nevertheless, people with mid-level skills will continue to be in One consequence is a widening demand, especially for jobs that require inequality in hours worked. More analytical reasoning. The polarization educated people tend to work longer between high- and low-level skills will hours than less-skilled people (Mokyr continue and there will be heightened et al, 2015). US labor statistics bear this demand for employees with skills in out: in 2015, the U.S. unemployment literacy, numeracy, problem solving, and rate was 6 percent for people with a common sense (Autor 2015). high school degree but just 3.5 percent for those with a bachelor’s degree. It is vital that the obstacles to building Combined with automation, where digital skills are understood and predictable and rules-based jobs are addressed. This is especially important mechanized, there is a shift from as the global economy moves to middle-skill jobs to higher- and lower- jobs that require expertise in literacy, skill jobs—a “hollowing out” of the labor numeracy, and problem-solving. One Table 22: Social Media Use, People 15 and Older, by Country, 2017/18, Percent Difference in Difference in Total Male Female Urban Rural Penetration Penetration South Africa 42.4 43.8 41.2 2.6 49.8 28.9 20.9 Senegal 29.4 33.2 25.2 8.0 38.4 21.5 16.8 Ghana 27.2 32.6 22.1 10.5 36.2 16.1 20.1 Nigeria 26.7 35.8 18.8 17.0 40.3 18.7 21.6 Kenya 25.0 30.0 20.8 9.2 49.0 16.3 32.7 Tanzania 12.4 14.8 10.2 4.6 28.4 4.5 23.9 Uganda 11.7 12.1 11.3 0.8 26.8 7.0 19.8 Mozambique 8.8 12.3 6.1 6.2 20.4 3.2 17.2 Rwanda 6.0 7.6 4.5 3.1 19.0 2.4 16.6 Source: RIA 2018. PAGE 56 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION proxy indicator for digital skills is the use Introducing fast Internet increases of social media. Social media penetration employment. The arrival of submarine in Tanzania is currently far below that cables in countries that did not previously in Nigeria, Ghana, and South Africa, have access on average produces higher though on a par with Uganda (Table Internet speeds and increases the use of 22). The difference between urban and technology. The most interesting finding rural penetration indicates a significant of Hjort and Paulsen (2019) was that skills gap: only 4.5 percent of the rural there was a relatively large increase in population uses social media. This employment in areas when fast Internet underscores the need for strong policy became available. Though more jobs incentives and coordination for rural were created in skilled occupations access so as to deliver more affordable for people with tertiary education, in and attractive broadband access for unskilled occupations employment of rural dwellers. people with primary and high school education also went up. Depending on Digital innovation and the country, the increase in employment entrepreneurship ranged from 3.1 to 13.2 percent. In The digital sector can transform 2016 official formal employment29 in the growth prospects of Tanzania’s Tanzania was 2.5 million. A 3.1 percent economy. In developed countries, ICT increase would mean more than 80,000 access tends to mirror inequalities in more jobs, and a 13.2 percent increase, education. In the developing world, 343,000 more. With faster internet, and especially Africa, income is a more new firms also entered the market, important differentiator, and mobile particularly in sectors that used ICT. The broadband is negatively correlated to result was more intensive use of ICT and the Gini index. In other words, a higher higher firm-level productivity. penetration of mobile broadband is Tanzanians find it difficult to start associated with a more equal distribution a new business. The World Bank’s of income (World Bank 2019). Hjort and Ease of Doing Business index shows Poulsen (2019) found that fast Internet that regulatory factors inhibit new narrows employment inequalities and businesses and raise the cost of starting jobs are created for both the skilled one (Table 23). Tanzania ranks the and the unskilled. This means that lowest of four East African countries mobile broadband can directly target overall, and on half of the featured inclusive economic growth—growth indicators. One approach the World distributed fairly across society, creating Bank is trialing to promote innovation, opportunities for all.28 in partnership with the Government of Tanzania and the Department for International Development (DFID) of 28 OECD, https://www.oecd.org/inclusive- 29 http://www.nbs.go.tz/nbs/takwimu/labour/EES_2016_ growth/#introduction. REPORT.pdf. PAGE 57 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 23: World Bank Ease of Doing Business Rankings, 2019 Economy Tanzania Rwanda Kenya Uganda Global rank 141 38 56 116 Starting a business 162 35 129 169 Dealing with construction permits 149 81 105 113 Getting electricity 85 59 70 168 Registering property 146 3 134 135 Getting credit 67 4 4 80 Protecting minority investors 105 114 1 88 Paying taxes 165 38 94 92 Trading across borders 182 88 117 121 Enforcing contracts 71 32 89 77 Resolving insolvency 116 62 50 99 Note: Red indicates the lowest ranking in each category. Source: World Bank, Doing Business 2019. the UK, is a Resilience Academy to teach comply with the European General Data young people microwork skills. Over the Protection Regulation (GDPR).31 The last three years, some 1,280 students goal would be to encourage Tanzania– have benefitted from 10-week industrial EU trade. In fact, Tanzania could draft placements.30 GDPR-compliant rules for domestic firms; EU companies are likely to be Digital trade more willing to trade with companies Trade is generally between companies, that follow the same rules. No law would not countries. To increase trade between be required to get this done—it would African countries, it is necessary to be be a voluntary strategy. able to trust the companies—but the In 2017 digital services as a environment where they work is shaped percentage of all exported services by that country’s laws. The regulatory declined from 16 percent to under gaps in Tanzania’s digital ecosystem, in 11 percent. Meanwhile, digital imports particular the lack of data protection, have been climbing steadily. The drop in reduces consumer trust. Tanzania has digital exports suggests that there are significant opportunities to grow digital obstacles that have to be addressed if trade; Figure 32 shows, for instance, the balance of digital trade is to improve that increasing Tanzania’s digital trade (Figure 27). to Kenya’s level would triple the country’s trade. Of the many strategies for increasing digital trade, the most urgent for There are innovative strategies that Tanzania would be passage of a could encourage trade. For example, data protection act. This would also Tanzania could create Data Protection encourage intra-Tanzanian trade. Zones in provinces where all companies 31 The GDPR is summarized at https://en.wikipedia.org/ 30 https://resilienceacademy.ac.tz/. wiki/General_Data_Protection_Regulation. PAGE 58 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Figure 27: Trade per Capita Digitally Delivered, US$, 2017 Source: UNCTAD. Trust is about perception: consumers • They will be able to cost-effectively would be more willing to send their protect their brand so that personal information to suppliers if they competitors cannot piggy-back on knew that the Tanzanian government the money they spend on marketing. would punish companies that abuse • Fraudsters will be prevented from personal information. A Tanzanian data unfairly competing by, e.g., cloning, protection law is also more likely to or reverse-engineering products engender trust in the brand ‘Tanzania’ that are protected by patent and among EU consumers and others design laws. worldwide. In theory, Tanzania could draft a very good data protection law, • Local content production— but without the right staff and funds particularly content that is subject for a solid Data Protection Authority, it to copyright, such as images and would still not be a safe country for EU music: personal data. Currently, for instance,  can be cost-effectively South Africa has a law that is reasonably protected, and well-drafted, but it appears unlikely that  can generate a reasonable the South African Information Regulator revenue stream through will ever have enough funding for the EU collecting societies32 that to consider the country safe. 32 A collecting society is defined as: “A copyright collective (also known as a copyright society, copyright collecting To encourage digital trade, certain agency, licensing agency or copyright collecting society or collective management organization) is a body created factors need to be satisfied. Suppliers by copyright law or private agreement which licenses copyrighted works on behalf of the authors and engages considering entry into Tanzania want to in collective rights management” (https://en.wikipedia. know that: org/wiki/Copyright_collective). For this report, the term “collecting society” was chosen because this was the term defined in the South African Copyright Act of 2006 (https://www.gov.za/sites/default/files/gcis_ document/201409/28894.pdf). PAGE 59 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region function smoothly, pay royalties Recommendation: Release additional regularly, and cooperate with spectrum quickly to relieve congestion international collecting societies. and to lower the cost of provision. This can be done on a trial basis with • Enforcement of intellectual property an impact assessment conducted protection is quick, reliable, and after the trial (and the end of the cheap. pandemic). • Creating owning and transferring web domains must be easy, reliable,National transmission is expensive and cheap. in part because regulatory obstacles prevent rollout. Halotel has reported As yet, for the most part rolling out 18,000 km of fiber (25 percent Tanzania cannot give suppliers more than all fiber laid up to that point) much reassurance. The proposed but has only 10 percent market share, amendments to the Copyright and indicating at the very least that its Neighbouring Rights Act of May 201933 network is under-utilized. Competitive put in place penalties for copyright provisioning of national transmission infringement, but there is no way should be allowed by all operators with to establish a reasonable revenue a facilities-based license, including stream for artists. It is also not clear on routes already served, and would how the Copyright Administrator will conform with current policy statements be funded, potentially making the act that support fair competition. unenforceable. Recommendation: Government must 2.4 Recommendations explicitly allow competitive provision- In the short term, and in the context ing of national data transmission and of the COVID-19 pandemic, there lift existing restrictions on fiber invest- are several quick wins that the ment. Government of Tanzania can adopt Mobile money is growing steadily that will have an immediate impact on but few Tanzanians use it. Low-value the digital economy: transactions are expensive. The mobile The relatively high cost of internet money sector could be super-charged by access in the first and middle mile considering, e.g., low to zero transaction means consumers face affordability fees for small amounts. challenges. Strategies to improve af- Recommendation: Government can fordability need to be considered. The incentivize operators to charge low COVID-19 pandemic also means that or zero transaction fees by tying gov- networks are being stress tested with ernment payments (such as social greater usage than usual. The release welfare payments) to a low-fee trans- of additional spectrum could lower the action regime. This may be trialed as cost of provision and provide benefits part of the COVID-19 response. to consumers in the form of lower data prices. 33 The amendments have not yet been passed. PAGE 60 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION In the medium term, obstacles to are essential to consumer trust in online greater growth need to be identified transactions. Tanzania’s ranking of and removed: 141st in the World Bank’s Ease of Doing Business Index demonstrates that One factor causing low usage is that unfriendly regulation is holding back prices for low-volume data packages are high. As a result, usage is low entrepreneurship and innovation. compared to neighboring countries. Also Recommendation: Government low is usage of national transmission and should devise a digital roadmap that international data. Regulatory factors are shows a timeline for implementation helping to push up the cost. Regulatory of digitally relevant laws like data pro- impact assessments should be urgently tection, consumer protection and in- considered, take account in particular tellectual property. the poor, women, disabled persons and other disadvantaged groups. The overall regulatory approach to digital trade needs to be addressed. Recommendation: Government may Poorly designed regulations, such as require the TCRA to incorporate Reg- those related to registration of biometric ulatory Impact Assessments prior to SIM cards, have real consequences issuing new regulations. and hurt the poor disproportionately. Data quality is poor. It appears that Disconnecting large numbers of both 3G and 4G coverage is significantly subscribers will severely depress lower than reported. Planning is operator revenues and potentially constrained by the poor quality of capital spending. There is a desperate regulatory information, particularly need for a strong data protection act and about fiber rollout and broadband supportive regulations if digital trade is coverage. Coverage data should be to be expanded. A regulatory strategy to made publicly accessible. grow digital trade should therefore be considered. Recommendation: Government must require both operators and the TCRA Recommendation: A regulatory strat- to make digital coverage maps pub- egy should be devised by the Gov- licly available, for 3G and 4G and fi- ernment that addresses major bottle- ber, as well as providing access to raw necks for growing digital trade, such data online. as the time to register a business, im- port and export regulations, digitally In the longer term, the Government of relevant laws, notably a data protec- Tanzania needs an integrated strategy tion act, and other factors. to grow the digital economy. One barrier to digital trade is the lack of an enabling legal environment. Tanzania lacks digital-relevant laws, especially for the protection of data, consumer privacy, and intellectual property, that PAGE 61 Macroeconomics, The World Bank Group Macroeconomics Trade and and Fiscal Management Investment Global Practice,Africa GlobalPractice, Region AfricaRegion 3 Annexes PAGE 62 Statistical Annexes 63 PAGE Annex 1, Key Macroeconomic Indicators 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 National Acciounts and Prices GDP at constant market price (% change) 5.3 6.3 7.7 4.5 6.8 6.7 6.2 6.9 6.8 5.4 Agriculture 4.2 3.2 2.5 3.4 2.8 6.9 5.4 4.8 6.0 4.5 Industry 3.4 9.2 11.8 4.2 10.5 6.0 9.7 11.7 10.7 9.1 Service 5.5 7.8 8.2 6.4 5.1 9.3 6.4 6.3 5.3 3.5 Inflation (e.o.p) 12.1 5.1 12.7 16.0 7.9 6.1 5.6 5.2 5.3 3.5 Per capita (in US$) 681.4 726 765 870 969 1000 912 934 1005 1056.0 TA N Z A N I A E C O N O M I C U P D AT E Fiscal (% of GDP, fiscal year) Revenue and grants 16.0 15.2 15.3 15.9 15.4 15.6 14.0 14.8 16.3 16.1 Tax and nontax revenue 12.2 11.8 11.9 12.6 12.8 13.5 12.8 14.3 15.3 15.3 Grants 3.8 3.4 3.4 3.2 2.6 2.1 1.2 0.5 1.0 0.8 Expenditure and net lending 19.6 20.4 19.5 18.9 20.5 18.5 17.1 18.3 17.4 20.0 Overall balance (excluining grants) -7.4 -8.6 -7.7 -6.2 -7.7 -5.0 -4.3 -4.0 -2.1 -4.8 Overall balance (including grants) -3.6 -5.2 -4.3 -3.0 -5.1 -2.9 -3.1 -3.5 -1.1 -3.9 Financing 3.4 4.8 4.8 3.6 5.0 3.3 3.3 3.5 1.5 3.9 Foreign financing (net) 2.7 3.4 2.2 3.0 3.9 3.0 3.1 1.4 1.6 2.5 Domestic financing (net) 0.6 1.4 2.6 0.6 1.1 0.3 0.2 2.1 -0.1 1.5 Money and Credit M3 (% change) 17.7 25.4 18.2 12.5 10.0 15.6 18.8 3.4 8.0 4.5 Credit to private sector (% change) 9.6 20.0 27.2 18.2 15.3 19.4 24.8 7.2 1.7 4.9 External sector (US$ million unless otherwise) Exports (goods and services) 5,086 5,743 7,051 7,987 8,335 8,886 8,877 9,341 8,813 9,447 J UNE 2020, 14TH EDITION Imports (goods and services) 7,876 8,365 9,996 12,946 12,871 13,966 13,348 11,597 9,596 11,519 Gross official reserves 2,930 3,482 3,610 3,797 4,357 4,638 4,285 3,870 5,022 4,944 (months of imports) 4.5 5.0 4.3 3.5 4.1 4.0 3.9 4.0 6.3 5.2 Current Account Balance (% of GDP) -7.8 -7.1 -7.9 -13.1 -10.5 -10.7 -9.8 -6.5 -3.0 -3.8 Exchange rate(Tsh/US$; e.o.p) 1,314 1,379 1,572 1,569 1,603 1,655 1,974 2,179 2,230 2,274 Debt Stock and Service Total public debt (% of GDP) 22.9 22.9 25.7 26.8 29.1 30.0 32.4 38.6 38.1 37.8 External debt (public sector, % of GDP) 16.2 17.6 20.2 21.1 22.6 23.2 24.7 30.8 22.3 23.9 Domestic public debt (% of GDP) 6.7 5.3 5.5 5.7 6.5 6.9 7.7 7.8 15.8 13.9 Source: World Bank, IMF, and Tanzania authorities. Annex 2. Annual Real GDP Growth Rates (Percent Change) Economic Activity 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Agriculture and Fishing 4.2 3.2 2.5 3.4 2.8 6.9 5.4 4.8 5.9 5.3 Crops 4.5 4.8 3.5 4.3 4.4 9.4 7.6 5.4 6.4 5.0 Livestock 5.1 1.3 0.6 1.9 4.8 4.9 4.9 4.9 4.9 4.9 Forestry and Hunting 5.0 3.4 3.1 3.6 4.5 4.8 3.4 3.9 4.8 4.9 Fishing -0.1 0.9 2.5 3.0 -13.3 1.8 -4.5 1.2 8.3 9.2 Industry and construction 3.4 9.2 11.8 4.2 10.5 6.0 9.7 11.7 10.6 9.3 Mining and quarrying 18.4 7.2 6.0 6.7 4.5 6.4 10.0 7.4 5.3 1.5 Manufacturing 4.5 8.9 6.7 4.2 3.7 10.0 7.1 10.8 8.2 8.3 Electricity supply 4.0 13.4 -4.6 3.4 8.2 12.7 -2.0 8.8 1.0 5.8 Water supply; sewerage, waste management 4.1 2.5 -1.4 2.9 2.7 3.8 2.4 6.9 6.4 7.4 Construction -3.7 10.3 22.0 3.3 19.1 2.5 12.9 14.5 15.1 12.9 Services 5.5 7.8 8.2 6.4 5.1 9.3 6.4 6.3 5.3 6.3 Wholesale and retail trade; repairs 2.5 10.0 11.0 3.9 4.2 9.9 3.6 5.9 6.1 5.8 Transport and storage 6.7 10.7 4.2 4.2 6.0 8.7 5.4 5.7 6.7 11.8 Accommodation and Food Services 0.8 3.7 3.9 6.8 0.9 3.1 1.7 4.1 3.1 5.2 Information and communication 26.4 24.4 8.3 22.3 11.6 10.3 7.8 2.2 6.2 9.1 Financial and insurance activities 18.1 12.6 14.5 5.2 -1.1 10.5 11.3 1.1 -2.8 -0.5 Real estate and business services 3.2 8.3 3.1 6.5 9.5 10.3 7.6 11.4 4.4 4.4 Public administration and defence -1.0 -5.0 15.6 9.2 9.7 6.7 7.2 5.4 10.8 5.6 Education 8.9 6.3 5.4 7.5 0.3 13.4 10.4 10.4 7.3 6.6 Human health and social work activities 7.2 3.3 5.1 11.5 -3.1 8.4 5.1 5.6 7.6 8.1 Other Social and Personal services 4.4 5.6 5.6 6.7 8.9 9.8 5.1 11.7 12.0 6.5 All economic activities 4.6 6.6 7.2 4.9 5.7 7.7 6.9 7.3 7.0 6.9 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Net taxes 12.8 3.8 12.1 0.4 17.5 -2.2 -1.7 2.0 4.6 8.0 Total GDP 5.3 6.3 7.7 4.5 6.8 6.7 6.2 6.9 6.8 7.0 Source: National Bureau of Statistics. 64 PAGE Annex 3. Share of Economic Activities in GDP (current market prices) 65 PAGE Economic Activity 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Agr icultur e and Fishing 26.0 25.6 25.0 26.6 26.8 25.8 26.7 27.4 28.8 28.2 Crops 12.7 13.1 12.9 14.1 14.4 14.0 14.1 15.2 16.6 .. Livestock 8.5 8.0 7.6 7.4 7.7 6.8 7.6 7.6 7.5 .. Forestry and Hunting 2.6 2.5 2.4 2.8 2.8 3.0 3.1 2.9 2.8 .. Fishing 2.2 2.0 2.0 2.2 1.9 2.0 2.0 1.8 1.9 .. 0.00 0.00 0.00 0.00 0.00 0.00 I ndustr y and constr uction 21.7 23.6 26.4 25.4 25.4 25.1 24.5 24.9 25.0 26.8 Mining and quarrying 2.9 4.1 5.1 4.9 4.3 3.8 4.3 4.9 4.4 5.1 TA N Z A N I A E C O N O M I C U P D AT E Manufacturing 8.7 8.7 9.5 9.4 9.1 9.1 7.9 7.8 7.7 8.1 Electricity and water 1.6 1.5 1.0 1.3 1.2 1.4 1.3 0.8 0.8 0.7 Electricity 0.9 0.9 0.6 0.8 0.8 1.0 0.8 0.4 0.3 0.3 Water 0.7 0.6 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 Construction 8.5 9.3 10.7 9.7 10.9 10.8 11.1 11.3 12.2 13.0 0.00 0.00 0.00 0.00 0.00 0.00 Ser vices 44.6 43.3 41.4 43.1 42.8 44.1 43.3 42.5 38.0 37.0 Wholesale and retail trade; repairs 9.9 10.0 10.4 10.3 9.7 9.7 9.3 9.1 9.1 9.1 Transport and storage 8.3 7.8 6.9 6.0 7.2 7.5 7.3 7.0 6.7 6.5 Accommodation and Food Services 2.5 2.3 1.9 2.0 1.8 1.6 1.5 1.4 1.3 1.3 Information and communication 2.1 2.3 2.0 2.1 2.0 1.9 1.8 1.6 1.5 1.5 Financial and insurance activities 3.8 3.9 4.1 4.1 3.5 4.4 4.4 4.9 4.0 3.7 Real estate and business services 7.0 6.6 6.1 6.2 6.1 6.1 6.0 5.9 2.8 2.7 Public administration and defence 4.7 4.3 4.4 4.6 5.0 4.8 4.8 4.5 4.2 4.0 J UNE 2020, 14TH EDITION Education 2.9 2.9 2.5 2.4 2.4 2.5 2.6 2.5 2.4 2.4 Human health and social work activities 1.9 1.8 1.7 1.6 1.5 1.5 1.5 1.4 1.4 1.4 Other Social and Personal services 1.5 1.4 1.3 1.3 1.2 1.3 1.2 1.2 1.2 1.3 Activities of households as employers .. .. .. 2.4 2.6 2.8 2.9 3.0 3.2 3.2 All economic activities 92.3 92.5 92.8 95.0 95.1 95.1 94.5 94.8 91.8 92.1 0.00 0.00 0.00 0.00 0.00 0.00 Net taxes 7.7 7.5 7.2 5.0 4.9 4.9 5.5 5.2 8.2 7.9 T otal GDP 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: National Bureau of Statistics. Annex 4. Quarterly Real GDP Growth Rates (Percent Change) Year Quarter Agricult Mining Manufa Electrici Water Constru Trade Accom Transpo Informa Financial Year Public Professi Adminis Real Educati Health Other All Taxes GDP at ure and c-turing ty c-tion and modati rt and tion & admi- onal, trative estate on services indust. on market quarryi Repair on & storage and insuranc nistrati Scientifi & at basic product prices ng restaur commu e on c& Support prices s ant nication Technic services al act. 1 4.3 -1.5 6.9 4.9 10.2 11.7 1.9 0.0 1.8 12.7 9.2 2.6 15.5 10.7 4.2 9.3 2.7 4.4 5.1 -18.1 2.9 2 8.0 10.7 6.6 9.0 -1.9 7.3 5.8 1.7 3.7 8.6 9.0 4.4 15.5 9.0 4.3 9.2 0.8 4.2 6.9 4.7 6.7 2015 3 4.6 3.3 8.5 -10.2 2.6 16.7 6.3 2.9 4.6 6.6 12.0 11.0 15.7 9.7 4.3 12.0 9.0 5.1 7.6 7.6 7.6 4 4.6 27.2 6.4 -9.8 -0.6 16.4 0.7 2.2 11.3 4.1 14.7 10.2 16.0 12.6 4.3 10.8 7.9 6.8 8.1 0.6 7.4 1 2.8 10.2 13.4 1.4 -1.1 17.3 9.6 3.3 9.9 3.8 11.5 19.6 16.5 17.8 4.3 20.6 15.7 9.2 9.4 13.0 9.7 2 8.0 14.9 9.7 5.4 8.6 11.4 5.6 0.6 8.6 2.1 4.1 15.5 16.9 20.5 4.3 17.9 11.2 10.8 9.2 -2.5 8.2 2016 3 6.0 14.4 7.3 11.7 4.0 23.4 6.4 3.6 5.1 2.2 -2.1 -6.2 17.2 20.9 4.3 1.7 -4.2 12.3 7.7 -3.8 6.6 4 3.1 -6.3 13.2 17.5 16.0 6.6 2.2 8.8 -0.2 1.0 -7.9 -3.9 17.4 19.1 4.3 3.7 1.1 14.3 3.5 2.9 3.4 1 6.5 9.9 5.2 4.4 1.6 12.0 1.9 4.7 5.3 12.6 -5.8 -5.9 17.6 15.5 4.4 1.3 0.1 12.6 5.5 -3.0 4.9 2 14.7 -4.6 9.6 -1.0 4.2 21.2 5.1 3.5 5.0 6.4 -2.5 0.1 16.4 12.3 4.4 5.6 6.8 11.4 7.1 0.3 6.6 2017 3 4.1 4.2 13.7 3.9 10.0 -0.3 5.8 2.5 6.9 1.9 -5.3 7.5 14.0 9.3 4.4 11.3 11.1 9.8 5.1 4.0 5.0 4 6.4 12.1 4.5 -3.1 16.4 28.8 11.3 2.3 9.6 4.5 2.6 8.3 10.5 6.5 4.4 11.0 12.8 7.7 9.8 15.6 10.3 1 6.5 -5.7 5.3 0.8 3.7 15.6 4.3 4.5 8.8 14.9 -2.9 8.8 12.6 5.2 4.4 11.2 17.4 8.7 7.0 7.0 7.5 2 6.1 6.8 3.6 6.8 6.1 5.2 4.0 6.7 13.5 12.4 -2.3 -0.7 11.2 5.4 4.4 4.1 5.9 8.4 5.5 5.5 6.1 2018 3 3.8 1.9 7.0 5.6 10.7 13.9 6.9 7.7 12.1 4.8 3.9 2.8 9.3 5.7 4.4 6.1 7.5 7.8 6.9 6.9 7.1 4 4.4 3.2 16.7 9.8 8.3 17.3 8.0 1.9 12.6 4.4 -0.5 1.8 6.9 6.1 4.5 5.0 2.2 5.6 7.9 7.9 7.1 1 6.3 10.0 4.8 9.7 8.0 13.2 3.8 1.1 11.1 9.6 5.6 2.7 6.6 8.7 4.5 3.6 -2.1 5.7 7.0 7.0 6.6 2019 2 4.0 17.2 5.2 4.3 10.0 19.6 5.5 2.6 7.0 10.3 5.0 4.7 6.8 8.5 4.5 5.8 2.4 6.7 7.7 1.2 7.2 Source: National Bureau of Statistics. The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 66 PAGE Annex 5. Inflation Rates (Percent Change) 67 PAGE Month Headline Food & Non Transport Housing, Furnishing, Clothing & Restaurants Miscel. Goods Alcoholic and Communi- Education Recreation & Health Overall Index Alcoholic Water,Electrici Housing Footwear and Hotels and Services Tobacco cation & Culture Beverages ty,Gas & Other Equipment & Entertainment (Exclude Food Fuel Routine consumed at Maintenance Restaurants) of House Weight (%) 100.0 47.8 9.5 9.2 6.7 6.72 6.4 4.5 3.3 2.1 1.7 1.3 0.9 Oct 2017 5.1 8.8 0.2 7.6 2.8 3.4 0.6 3.0 2.6 -0.9 0.8 1.9 2.1 Nov 2017 4.4 7.4 0.1 7.8 1.8 3.1 0.3 2.6 2.5 -1.0 0.8 1.6 2.0 TA N Z A N I A E C O N O M I C U P D AT E Dec 2017 4.0 6.2 0.0 8.3 1.3 2.9 0.3 2.5 2.6 -1.0 0.8 0.9 2.0 Jan 2018 4.0 6.3 0.3 7.1 1.8 2.7 0.8 2.6 2.6 -1.0 2.5 2.0 1.6 Feb 2018 4.1 5.4 1.6 8.6 1.6 3.3 0.9 2.7 2.3 -0.2 2.5 1.5 1.6 Mar 2018 4.0 4.7 1.4 10.4 1.9 3.2 0.8 1.2 2.0 -0.2 2.4 1.1 1.6 Apr 2018 3.8 3.6 1.8 13.1 2.0 2.6 0.8 0.9 1.6 0.1 2.4 1.2 1.6 May 2018 3.6 2.6 1.9 15.0 2.3 2.4 1.0 1.2 1.3 0.1 2.3 0.7 1.2 Jun 2018 3.4 3.4 1.7 12.0 2.4 2.2 0.7 1.4 0.3 -2.6 2.6 0.5 1.4 Jul 2018 3.3 2.8 2.5 12.3 2.6 2.4 0.8 1.2 0.8 -2.7 2.5 0.4 0.7 Aug 2018 3.3 2.2 3.4 12.3 3.1 2.7 1.1 1.2 1.2 -2.6 2.5 -0.2 1.7 Sep 2018 3.4 2.0 2.8 13.1 3.0 3.2 1.9 1.3 1.9 -2.6 2.5 -0.2 1.3 Oct 2018 3.2 1.2 3.0 14.1 2.8 3.4 1.9 1.6 1.9 -2.7 2.4 -1.0 0.8 Nov 2018 3.0 0.4 5.1 13.4 2.9 3.3 1.9 1.7 1.6 -2.7 2.4 -0.7 0.8 Dec 2018 3.3 1.0 5.1 12.1 4.0 3.6 2.7 2.6 2.2 -2.6 2.4 0.1 1.0 Jan 2019 3.0 0.7 4.0 11.7 3.9 3.7 2.6 2.5 2.2 -2.4 2.0 0.2 1.0 Feb 2019 3.0 0.5 3.3 12.3 4.1 3.3 3.6 2.6 2.5 -2.1 1.8 0.2 1.5 Mar 2019 3.1 0.1 4.1 13.0 4.3 3.4 4.8 3.1 3.2 -1.2 1.9 0.3 1.8 J UNE 2020, 14TH EDITION Apr 2019 3.2 0.9 3.4 11.4 4.2 3.6 4.9 2.7 3.2 -1.1 2.1 0.6 2.2 May 2019 3.5 2.2 4.1 8.8 4.3 3.7 4.9 2.5 3.4 -1.1 2.1 3.2 2.0 Jun 2019 3.7 2.3 4.8 8.9 4.1 3.1 4.8 2.4 4.2 1.0 1.8 3.4 1.8 Jul 2019 3.7 2.9 4.1 8.1 3.9 2.7 4.7 2.5 3.6 1.1 1.6 1.6 2.2 Aug 2019 3.6 3.7 2.7 6.3 3.7 2.9 4.6 2.5 2.1 0.7 1.6 1.8 1.4 Sep 2019 3.4 4.0 3.2 4.3 3.7 2.6 4.2 2.4 1.3 0.6 1.6 2.0 1.9 Source: National Bureau of Statistics. Annex 6. Food Crop Prices (Regional Averages, TZS per 100Kg) Maize Rice Wheat Beans Sorghum Month Year Arusha Dar es Mbeya Arusha Dar es Mbeya Arusha Dar es Mbeya Arusha Dar es Mbeya Arusha Dar es Mbeya Salaam Salaam Salaam Salaam Salaam Oct 2017 53,714 54,207 200,313 191,389 66,214 121,404 166,875 194,681 62,357 95,148 - Nov 2017 51,417 52,288 50,333 177,000 188,054 181,667 69,000 118,167 134,167 197,500 201,736 210,833 59,500 89,885 - Dec 2017 52,625 52,083 53,000 201,563 189,306 188,750 67,071 113,722 192,000 175,000 200,000 200,000 66,222 83,000 - Jan 2018 51,750 47,828 49,000 210,000 189,643 185,833 73,900 110,889 125,000 160,000 207,917 207,500 62,833 86,917 - Feb 2018 48,417 49,427 203,000 196,563 72,778 114,115 160,313 197,135 58,429 79,690 - Mar 2018 48,091 54,958 179,708 194,750 69,850 126,538 145,000 193,281 55,278 79,091 - Apr 2018 46,333 46,375 216,667 210,000 70,625 128,750 199,375 56,500 101,250 May 2018 46,500 49,333 35,000 190,000 170,000 195,000 72,500 130,000 141,000 155,000 206,667 147,000 61,000 85,000 Jun 2018 44,300 49,286 35,000 185,000 171,071 186,667 65,600 126,429 136,833 149,500 185,000 151,583 48,100 92,857 Jul 2018 43,833 42,167 35,000 185,000 145,000 190,000 63,167 125,833 136,000 137,500 186,667 152,500 46,333 85,000 Aug 2018 37,250 45,483 181,875 164,188 63,188 127,500 118,750 191,875 44,688 88,083 Sep 2018 35,182 40,855 360,000 328,788 63,591 119,377 118,409 190,269 47,727 80,758 Oct 2018 34,071 36,524 31,000 180,000 167,024 180,000 63,857 127,381 100,000 120,000 186,429 170,000 44,000 76,190 90,000 Dec 2018 42,667 52,528 36,000 168,750 158,889 140,417 66,958 117,917 118,750 121,667 185,333 180,833 59,375 75,375 101,208 Jan 2019 43,275 58,200 36,000 177,000 171,333 140,000 66,500 126,667 120,000 123,500 192,567 180,000 39,100 77,667 101,500 Feb 2019 43,111 65,241 39,000 180,000 184,630 180,000 78,000 133,889 120,000 127,778 197,963 170,000 36,556 76,019 101,500 Mar 2019 43,818 55,894 39,455 181,818 184,318 151,818 80,909 133,788 130,000 131,591 190,758 190,000 35,045 77,273 102,500 Apr 2019 65,333 61,361 42,000 181,667 180,278 172,500 88,833 135,000 130,000 132,500 187,500 190,000 43,333 82,222 102,500 May 2019 62,500 68,056 43,875 195,000 173,889 172,500 85,889 132,407 130,000 148,889 187,963 190,000 44,500 87,778 102,500 Jun 2019 64,889 71,185 45,000 181,667 166,481 172,500 92,333 126,296 130,000 148,056 183,333 190,000 42,056 88,148 102,500 Jul 2019 69,667 75,583 52,500 175,417 166,389 148,750 76,875 126,250 130,000 155,417 181,944 .. 49,208 85,694 102,500 Aug 2019 72,136 77,432 60,000 191,818 178,864 125,500 89,000 129,318 160,000 147,773 190,000 162,000 55,818 92,955 145,000 Sep 2019 77,432 74,545 64,200 194,091 185,455 127,833 77,500 121,591 160,000 155,000 191,648 160,800 53,591 91,023 102,778 Source: Ministry of Industry, Trade, and Marketing. The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 68 PAGE TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Annex 7, Food Crops Prices (National Average, TZS per 100Kg.) Month-Year Beans Maize Rice Round Sorghum Potatoes Oct-17 164,917 54,389 187,154 67,159 88,898 Nov-17 178,769 50,819 184,648 67,466 74,251 Dec-17 175,313 61,403 192,401 70,613 74,916 Jan-18 177,044 49,880 194,294 76,226 76,809 Feb-18 178,078 48,530 199,295 70,096 72,135 Mar-18 166,248 45,876 180,224 69,901 78,402 Apr-18 170,814 42,662 195,546 69,903 76,637 May-18 174,587 41,850 170,953 70,984 91,327 Jun-18 165,421 42,722 160,081 74,153 87,824 Jul-18 161,234 41,283 153,053 77,358 68,168 Aug-18 153,881 40,520 146,181 79,721 80,448 Sep-18 154,304 39,908 247,492 81,736 76,052 Oct-18 158,810 33,865 175,675 81,558 70,063 Nov-18 Dec-18 162,611 43,731 156,019 86,598 78,653 Jan-19 165,356 45,825 162,778 82,434 72,756 Feb-19 165,247 49,117 181,543 75,069 71,358 Mar-19 160,394 49,663 165,725 - 78,159 Apr-19 159,606 54,027 166,172 - 76,864 May-19 163,601 59,160 167,412 - 76,486 Jun-19 162,802 59,851 164,936 - 81,557 Jul-19 161,636 62,560 162,267 - 77,945 Aug-19 159,109 66,110 158,675 - 86,729 Sep-19 167,866 71,046 169,732 - 91,400 Source: Ministry of Industry, Trade, and Marketing. PAGE 69 Annex 8. Balance of Payments (Percent of GDP, except where noted otherwise) 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 1. CA balance (including transfers) -7.8 -7.1 -7.9 -13.1 -10.5 -10.7 -9.8 -6.5 -3.0 -3.8 -3.9 Exports of Goods 11.7 12.4 15.0 15.5 12.9 12.0 11.1 12.4 9.9 9.0 8.5 o/w Gold Import of Goods -21.6 -20.2 -20.1 -22.4 -25.3 -22.5 -23.5 -23.7 -20.6 -20.9 -21.7 Services ( net) 0.6 0.5 0.5 0.2 1.3 1.4 1.7 2.0 3.6 3.2 3.1 Trade balance -10.6 -9.1 -9.5 -14.1 -12.1 -12.3 -10.9 -7.4 -5.6 -5.9 -5.9 Income ( net) -1.1 -1.5 -1.9 -1.8 -1.5 -1.4 -1.8 -1.9 -1.9 -1.9 -1.9 Current transfers ( net) 3.4 2.9 3.0 2.6 1.9 1.6 1.2 0.7 0.9 0.8 0.8 2. Capital and financial account 8.3 8.9 10.3 11.5 12.2 10.1 7.9 6.1 5.3 4.5 4.3 Capital account 1.4 1.7 1.7 2.2 1.8 1.6 0.9 0.7 0.9 0.9 0.8 Financial account 6.9 7.2 8.5 9.4 10.4 8.5 7.0 5.3 4.5 3.6 3.5 o/w Direct investment 3.9 3.2 4.6 4.2 4.6 4.4 3.4 3.3 1.8 1.9 1.8 3. Net errors and omission -0.4 -0.2 -2.1 2.4 -0.6 1.1 1.4 -0.3 0.1 0.6 0.0 4. Overall balance 0.1 1.6 0.3 0.8 1.1 0.5 -0.6 -0.8 2.4 1.2 0.4 5. Reserves and related items -0.1 -1.6 -0.3 -0.8 -1.1 -0.5 0.6 0.8 -2.4 -1.2 -0.4 Reserves assets -0.9 -1.9 -0.4 -0.8 -1.4 -0.5 0.7 0.9 -2.3 -1.0 -0.2 Use of Fund credit and loans 0.9 0.3 0.1 -0.1 0.3 0.0 -0.1 -0.1 -0.2 -0.2 -0.2 Source: BOT., IMF, and World Bank. The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 70 PAGE 71 Annex 9. Fiscal Framework (Percent of ) PAGE 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Actual Actual Actual Actual Actual Actual Actual Actual Prel. Actual Estimates Revenue and grants 15.3 15.9 15.4 15.6 14.0 14.8 16.3 15.7 14.3 18.0 Domestic revenue 11.9 12.6 12.8 13.5 12.8 14.3 15.3 14.9 14.0 17.1 Tax Revenues 11.0 11.3 11.7 12.3 11.6 12.8 12.9 12.6 11.6 14.2 Non-Tax Revenues 0.9 1.3 1.1 1.2 1.3 1.5 2.4 2.4 2.4 2.9 Grants 3.4 3.2 2.6 2.1 1.2 0.5 1.0 0.8 0.3 0.9 Program grants 2.2 1.8 1.2 0.9 0.6 0.1 0.3 0.3 0.1 0.2 TA N Z A N I A E C O N O M I C U P D AT E o/w Basket funds 0.7 0.5 0.4 0.3 0.1 0.1 0.2 0.1 0.0 0.1 Project grants 0.8 1.1 1.0 0.9 0.6 0.4 0.7 0.5 0.2 0.7 Expenditure and net lending 19.5 18.9 20.5 18.5 17.1 18.3 17.4 17.0 16.9 20.4 Recurrent Expenditure 13.9 12.2 14.3 13.7 12.8 13.8 10.7 10.7 10.4 11.5 Wages and compensation 4.9 4.8 5.1 5.3 5.4 5.8 5.2 4.6 5.0 5.6 Interest Payments 0.7 0.8 1.2 1.3 1.5 1.5 1.6 1.7 1.8 1.8 Domestic 0.6 0.6 0.9 1.0 1.1 1.0 1.1 1.1 0.0 1.1 Foreign 0.1 0.2 0.3 0.3 0.4 0.5 0.5 0.6 1.8 0.7 Goods, services, and transfers 8.3 6.7 8.0 7.1 5.9 6.5 4.0 4.4 3.6 4.0 Development Expenditure 5.7 6.6 6.2 4.9 4.4 4.5 6.7 6.3 6.5 9.1 Domestically financed 2.0 3.3 2.9 2.5 2.7 3.0 4.7 4.5 5.0 7.2 Foreign financed 3.7 3.3 3.3 2.4 1.7 1.5 2.0 1.8 1.5 1.9 J UNE 2020, 14TH EDITION Overall balance (including grants) -4.3 -3.0 -5.1 -2.9 -3.1 -3.5 -1.1 -1.9 -3.2 -2.3 Financing 4.8 3.6 5.0 3.3 3.3 3.5 1.5 1.9 3.2 2.3 Foreign financing (net) 2.2 3.0 3.9 3.0 3.1 1.4 1.6 1.4 0.9 1.3 Gross foreign borrowing 2.3 3.2 4.1 3.3 3.4 2.0 2.6 2.5 0.0 2.9 Program loans 0.8 0.7 0.8 1.0 0.6 0.5 0.2 0.1 0.0 0.1 Project loans 1.3 1.0 1.1 0.7 0.8 0.8 1.2 1.2 0.0 1.1 Nonconcessional loans 0.2 1.4 2.2 1.6 2.0 0.7 1.2 1.2 0.0 1.7 Amortization -0.1 -0.1 -0.2 -0.2 -0.3 -0.6 -0.8 -1.1 0.0 -1.5 Domestic borrowing (net) 2.6 0.6 1.1 0.3 0.2 2.1 -0.1 0.5 2.3 1.1 Source: Tanzania authorities, IMF, and World Bank. Annex 10. Monetary Aggregates (Percent of GDP, except where noted otherwise) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Monetary aggregates M3 as % of GDP 22.9 24.6 24.1 23.5 22.1 22.5 23.4 21.1 20.8 20.3 M2 as % of GDP 17.2 18.0 17.1 17.2 16.3 16.8 16.7 15.3 15.4 15.0 M3 growth rate (%) 17.7 25.4 18.2 12.5 10.0 15.6 18.8 3.4 8.0 4.5 M2 growth rate (%) 20.8 21.8 15.0 16.0 10.9 17.0 13.4 5.3 10.4 3.8 Domestic credit Total Domestic credit (% of GDP) 13.3 15.2 16.8 17.7 17.7 19.4 21.6 19.3 17.0 17.5 Total domestic credit growth ( %) 21.3 32.8 33.8 21.3 17.4 24.1 26.8 2.5 -3.4 10.1 Private Sector credit ( % of GDP) 13.0 13.4 14.1 14.5 14.2 15.0 16.4 15.3 14.2 14.0 Private Sector credit growth ( %) 9.6 20.0 27.2 18.2 15.3 19.4 24.8 7.2 1.7 4.9 Interest rates structure Overall Tbills rate ( period average, %) 8.3 4.8 8.3 13.6 13.6 13.6 12.9 16.2 11.1 6.4 Average lending rate (%) 15.0 14.6 15.0 15.6 15.6 16.2 16.1 16.0 17.6 17.3 Average deposit rate( %) 6.8 5.9 6.3 8.4 8.3 8.4 8.9 9.2 10.0 8.2 Source: BOT. The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 72 PAGE TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Annex 11. Interest Rates Structure (Percent) Item (Percent) 2018 2019 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug A: Domestic Currency 1. Interbank Cash Market Rates Overnight 1.9 1.9 2.1 2.4 3.0 3.5 4.5 5.3 5.2 5.3 5.5 5.0 4.6 2 to 7 days 2.4 2.7 2.6 3.1 3.4 3.9 5.3 5.8 5.8 5.8 5.8 5.4 4.9 8 to 14 days 2.7 3.3 2.9 3.9 4.1 4.8 5.7 6.3 6.4 6.2 6.2 5.6 5.4 15 to 30 days 4.0 4.0 4.3 4.3 4.7 4.5 5.0 7.0 7.2 7.2 6.9 5.5 5.8 31 to 60 days 5.0 5.0 5.0 5.0 5.0 5.0 5.0 6.7 7.0 7.3 7.8 6.1 6.3 61 to 90 days 2.5 2.5 2.5 2.5 2.5 2.5 2.5 8.0 10.0 10.0 10.0 10.0 10.0 91 to 180 days 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 .. .. .. 181 and above 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 .. .. .. Overall Interbank cash market rate 2.2 2.3 2.3 2.7 3.3 3.7 4.7 5.6 5.5 5.6 5.7 5.4 4.9 2. Lombard Rate 4.0 4.1 4.1 4.1 4.5 6.8 6.8 7.9 7.8 8.0 8.2 7.6 7.0 3. REPO Rate 2.4 2.4 2.4 2.4 2.4 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4. Reverse REPO Rate 3.8 4.3 5.4 6.6 4.8 4.1 4.2 5.7 5.1 5.1 5.3 5.8 5.4 5.Treasury Bills Rates 35 days 2.7 2.7 2.7 2.7 3.0 3.0 3.1 3.3 3.4 3.5 3.6 3.8 3.7 91 days 3.0 3.0 3.0 3.0 3.5 3.5 3.7 3.8 4.1 4.1 4.3 4.4 4.4 182 days 5.3 5.1 5.0 5.2 5.3 5.3 5.3 5.2 5.3 5.1 5.2 5.2 5.2 364 days 8.1 8.0 8.1 8.6 9.2 9.3 9.2 9.2 9.1 9.1 9.0 8.3 7.7 Overall Treasury bills rate 7.6 7.2 7.4 8.2 8.7 8.5 8.7 8.7 8.2 8.6 8.7 8.2 7.7 6.Treasury Bonds Rates 2-years 9.0 9.0 10.5 10.5 10.5 11.4 11.4 11.4 12.0 12.0 12.0 12.0 11.1 5-years 11.9 11.9 11.9 12.0 12.0 12.0 12.7 12.7 12.7 13.0 13.0 13.0 13.0 7-years 12.3 12.3 12.3 12.6 12.6 12.6 13.2 13.2 13.2 13.2 13.2 13.2 13.2 10-years 14.4 14.4 14.4 14.4 14.9 14.9 14.9 15.1 15.1 15.1 15.7 15.1 15.2 15-years 14.8 14.8 15.0 15.0 15.0 15.5 15.5 15.6 15.6 15.6 15.7 15.7 15.7 20-years 17.7 17.7 17.7 17.7 17.7 17.4 17.4 17.4 17.4 17.4 17.4 17.4 7. Discount Rate or Bank Rate 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 8. Savings Deposit Rate 2.7 2.7 2.6 2.6 2.6 2.6 2.5 2.6 2.5 2.4 2.4 2.5 2.4 9. Overall Time Deposits Rate 7.6 8.2 7.8 7.7 7.5 7.3 7.2 7.6 7.4 7.6 7.4 7.3 7.0 1 month 8.2 8.8 9.7 9.8 8.9 9.2 9.7 9.2 8.5 8.9 8.6 8.2 8.3 2 months 8.3 9.4 8.3 7.6 8.2 7.3 7.2 8.3 8.3 7.9 7.4 7.7 4.9 3 months 7.9 8.0 7.3 7.6 7.3 6.6 6.8 8.0 7.4 7.6 7.6 6.8 7.6 6 months 8.4 8.8 8.1 7.4 7.4 7.4 7.5 8.0 8.1 8.3 8.3 8.5 8.0 12 months 7.8 7.4 8.0 7.9 8.4 8.7 8.5 9.0 8.1 8.9 9.1 9.1 8.9 24 months 11.9 13.7 11.4 11.3 10.3 10.1 9.8 9.5 9.7 9.9 9.8 9.8 9.8 10. Negotiated Deposit Rate 9.4 9.0 8.4 8.9 9.2 8.8 9.1 8.8 9.1 8.7 8.8 8.7 9.0 11. Overall Lending rate 17.1 17.5 17.1 17.0 16.7 17.2 16.8 17.2 17.2 17.2 16.9 16.9 16.8 Short-term (up to 1year) 18.2 18.7 17.8 18.2 17.8 17.0 16.4 17.5 16.9 17.0 16.4 16.3 16.3 Medium-term (1-2 years) 17.9 18.3 17.8 17.7 17.6 18.2 18.0 17.8 18.3 18.2 18.2 18.3 18.2 Medium-term (2-3 years) 17.4 17.8 17.4 17.3 17.1 17.8 17.3 19.0 17.9 17.8 17.6 17.4 17.5 Long-term (3-5 years) 16.8 17.1 16.7 16.6 16.2 17.1 16.9 16.8 16.7 17.1 16.6 16.7 16.6 Term Loans (over 5 years) 15.2 15.8 15.9 15.1 14.9 16.1 15.5 15.1 16.2 15.7 15.6 15.7 15.2 12. Negotiated Lending Rate 15.9 15.7 14.9 15.9 15.3 14.9 14.8 14.6 14.6 15.3 14.4 14.4 14.3 B: Foreign Currency Savings Deposits Rate 0.7 1.1 0.7 1.6 1.9 2.0 2.1 1.7 1.8 1.7 2.1 2.2 2.3 Overall Time Deposits Rate 3.5 3.5 3.5 3.6 3.6 3.4 3.2 3.1 3.1 2.6 2.8 2.3 2.3 1-months 3.4 3.4 3.5 3.2 3.4 3.3 3.3 2.7 2.8 1.6 1.9 1.8 2.2 2-months 3.2 3.9 4.0 4.5 4.6 4.5 3.2 2.9 3.3 2.8 3.4 3.0 3.2 3-months 3.8 3.5 3.1 3.3 3.3 3.2 2.7 3.5 3.7 2.3 2.9 2.3 1.9 6-months 4.1 3.5 3.9 3.6 3.3 3.2 3.4 3.1 2.9 2.8 2.4 1.7 1.9 12-months 3.0 3.3 3.1 3.3 3.4 3.1 3.3 3.1 3.1 3.4 3.5 2.5 2.4 Overall Lending Rate 8.0 5.9 6.9 7.7 8.3 8.0 7.7 7.6 7.5 8.2 8.1 8.0 7.5 Short-term (up to 1year) 8.7 7.1 7.3 7.5 8.9 6.8 6.8 8.2 8.2 8.5 7.9 7.6 7.5 Medium-term (1-2 years) 8.0 5.7 6.9 8.1 9.2 8.4 8.2 5.9 5.4 8.4 8.4 8.6 8.6 Medium-term (2-3 years) 7.6 4.6 7.2 7.5 7.8 8.0 7.6 7.8 7.9 7.7 7.6 8.3 8.3 Long-term (3-5 years) 8.1 5.6 6.2 8.1 8.2 8.9 8.0 8.0 8.0 8.4 8.3 7.7 7.7 Term Loans (over 5 years) 7.4 6.7 7.0 7.4 7.5 8.0 8.0 7.9 7.9 8.0 8.0 8.0 5.4 Source: BOT. PAGE 73 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Annex 12. National Debt Developments (Million US$) USD mn 2018/19 2019/20 Item Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 1. Overal External Debt Committed/2 27,972 28,292 28,436 28,761 28,909 29,293 28,989 28,882 29,111 29,574 29,516 29,057 Disbursed outstanding debt 18,775 18,891 19,122 19,254 19,370 17,724 19,641 19,715 19,755 20,029 20,287 19,877 Undisbursed debt 9,196 9,401 9,314 9,507 9,538 9,569 9,348 9,167 9,355 9,545 9,228 9,180 2. Disbursed Debt by Creditor Category/2 18,775 18,891 19,122 19,254 19,370 19,724 19,641 19,715 19,755 20,029 20,287 19,877 Bilateral debt 1,003 989 995 1,025 1,034 1,033 1,033 1,035 1,042 1,057 1,052 1,057 Multilateral debt 9,531 9,635 9,596 9,719 9,816 9,862 9,853 9,849 9,885 9,966 9,737 9,664 Commercial debt 6,372 6,276 6,494 6,472 6,484 6,779 6,706 6,818 6,801 6,923 7,422 7,149 Export credits 1,869 1,992 2,036 2,038 2,036 2,049 2,050 2,013 2,027 2,083 2,077 2,007 3. Disbursded Debt by Borrower Category/2 18,775 18,891 19,122 19,254 19,370 19,724 19,641 19,715 19,755 20,029 20,287 19,877 Central Government 14,850 14,957 14,943 15,107 15,216 15,436 15,369 15,441 15,477 15,727 15,804 15,713 Parastatal Companies 168 167 167 137 138 126 125 127 125 95 94 83 Private Sector 3,758 3,767 4,012 4,010 4,017 4,163 4,147 4,147 4,154 4,207 4,389 4,081 4. Disbursed Debt by Use of Funds/2 18,775 18,891 19,122 19,254 19,370 19,724 19,641 19,715 19,755 20,029 20,287 19,877 BOP & Budget Support 2,766 2,727 2,755 2,753 2,765 2,955 2,948 2,931 2,927 2,836 2,822 2,824 Transport & Telecommunication 4,058 4,220 4,280 4,302 4,325 4,312 4,296 4,382 4,425 4,634 4,957 4,794 Agriculture 1,216 1,211 1,224 1,243 1,252 1,251 1,252 1,248 1,246 1,256 1,253 1,258 Energy & Mining 2,990 2,960 2,994 3,016 3,020 3,069 3,093 3,067 3,070 3,105 3,097 3,082 Industries 640 650 664 656 657 657 662 660 658 666 663 640 Social Welfare & Education 2,959 2,967 3,004 3,009 3,049 3,151 3,150 3,201 3,209 3,254 3,237 3,272 Finance and Insurance 1,045 1,042 1,052 1,185 1,193 1,222 1,218 1,193 1,191 1,186 1,182 1,018 Tourism 109 116 118 152 152 152 152 171 171 171 171 169 Real Estate and Construction 1,076 1,078 1,087 1,079 1,091 1,091 1,072 1,071 1,069 1,109 1,117 1,113 Others 1,916 1,920 1,944 1,859 1,866 1,864 1,798 1,791 1,789 1,812 1,788 1,707 5. Total Amount of Loan Contracted/1 7 0 0 19 14 32 12 15 4 1 1 0 Government 0 0 0 0 0 0 0 0 0 0 0 0 Parastatal Companies 0 0 0 0 0 0 0 0 0 0 0 0 Private 7 0 0 19 14 33 12 15 4 1 1 0 6. Disbursements/1 95 98 46 183 57 299 64 174 61 292 335 25 Government 86 98 45 183 43 261 62 174 61 262 335 24 Parastatal Companies 0 0 0 0 0 0 0 0 0 0 0 0 Private 9 0 2 0 14 38 2 0 1 30 1 1 7. Actual Debt Service/1 139 29 74 150 44 83 131 55 60 161 4 388 Principal 102 16 46 108 18 70 98 38 27 114 1 365 Interest 37 12 29 42 26 13 34 17 33 46 3 23 Others 0 0 0 0 0 0 0 0 0 0 0 0 8. Net Flows on debt/1 -7 81 1 75 39 229 -34 136 34 177 334 -340 9. Net transfers on debt1 -44 69 -28 33 13 216 -67 119 1 131 331 -363 10.Arrears by Creditors Category/2 4,428 4,386 4,448 4,436 4,506 4,603 4,729 4,733 4,726 4,789 4,863 4,604 Principal 2,647 2,587 2,643 2,630 2,684 2,752 2,850 2,860 2,845 2,898 2,918 2,726 Bilateral 321 311 309 316 321 321 318 321 319 621 320 316 Multilateral 104 114 115 119 123 133 142 117 118 117 118 111 Commercial 1,183 1,176 1,174 1,097 1,131 1,156 1,224 1,264 1,260 1,282 1,286 1,242 Export Credits 1,039 986 1,045 1,098 1,109 1,141 1,166 1,158 1,148 1,178 1,194 1,058 Interest 1,780 1,799 1,805 1,807 1,823 1,851 1,879 1,873 1,881 1,892 1,945 1,878 Bilateral 847 850 847 883 889 891 893 893 895 901 900 902 Multilateral 33 38 38 40 40 42 43 29 29 25 25 29 Commercial 537 569 572 508 516 534 550 554 553 536 590 587 Export Credits 363 342 349 376 378 384 393 397 404 429 430 361 11. External Debt Stock 20,556 20,690 20,927 21,061 21,193 21,575 21,520 21,588 21,636 21,921 22,232 21,755 12. Domestic Debt Stock 6,181 6,162 6,300 6,382 6,223 6,146 6,162 6,484 6,779 6,492 5,957 61,448 13. Total Debt Stock 26,737 26,852 27,226 27,443 27,416 27,721 27,682 28,071 28,415 28,413 28,190 27,903 End Period Exchange Rate 2,289 2,291 2,290 2,293 2,295 2,290 2,290 2,290 2,289 2,290 2,289 2,289 Source: Ministry of Finance and BOT. Note: 1During the period. 2Position at the end of the period. PAGE 74 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Annex 13. Poverty by Geographical Region Poverty Distribution of Poverty Distribution Headcount the Poor Headcount of the Poor HBS 2011/12 HBS 2011/12 HBS 2017/18 HBS 2017/18 1 Basic Needs Poverty Line = TSh 36,482 Urban 15.5 15.9 15.8 19.0 Rural 33.3 84.1 31.3 81.0 Regions Urban 21.7 14.4 15.8 16.0 Rural 33.3 84.1 31.3 81.0 Dar es Salaam 4.1 1.5 8.0 3.0 Total 28.2 100.0 26.4 100.0 1 Food Poverty Line = TSh 26,085 Urban 6.0 17.7 .. .. Rural 11.3 82.3 .. .. Regions Urban 8.7 16.7 .. .. Rural 11.3 82.3 .. .. Dar es Salaam 1.0 1.0 .. .. Total 9.7 100.0 8.0 100.0 Source: National Bureau of Statistics. Note: 1 Monthly expenditure per adult. Annex 14: TARURA Charges Type of Initial Charge Annual Charge Type Unit structure (US$) (US$) Fiber optic cable Line Km 1,000 1,000 Telephone underground Line Km 50 30 cable Duct >0.28m2 Line Km 100 100 Gas/oil Pipe Km 50 30 Water Pipe Km 50 0 Sewage Pipe Km 50 0 Source: Tanzania Internet Service Providers Association 2019. Annex 15: Rights of Way Charges, in Tanzania, Rwanda and Zambia Tanzania Rwanda Zambia Initial charge $1,000 per km 0 $503 per km Annual charge $1,000 per km 0 0 Source: Tanzania Internet Service Providers Association 2019. PAGE 75 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Annex 16: Tanzania’s mAccess Scores Source: RIS. PAGE 76 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION Annex 17: 100MB Basket Prices, 2014–19 Cheapest 100MB basket 14 Kenya Mozambique Rwanda Tanzania Uganda 10.5 7 3.5 0 : RIS, 2019. Source Cash to cash transaction cost as share of transaction value Annex 0.4 18: Vodacom Tanzania, Quarterly Key Performance Vodacom Indicators, 2018 – 19 Halotel 0.3 31 Dec 2018 31 Mar 2019 Tigo 2019 30 Jun Airtel 30 Sep 2019 31 Dec 2019 0.2 customers Voice 14,070 14,133 14,322 14,755 15,598 Quarter 0.1 on quarter 0.45% 1.34% 3.02% 5.71% 0 Data customers 8,132 7,892 8,106 8,166 8,369 Quarter on quarter -2.95% 2.71% 0.74% 2.49% Source: Vodacom Tanzania Q3 Trading Update 2019. Annex 19: Airtel Quarterly KPIs for East Africa Dec 2018 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Voice revenue ($ Million) 154 143 144 158 161 Quarter on quarter -7.14% 0.70% 9.72% 1.90% Data revenue ($ Thousands) 67 67 71 75 83 Quarter on quarter 0.00% 5.97% 5.63% 10.67% Data usage per customer 1,310 1,459 1,671 1,905 1,991 (MB) Quarter on quarter 11.37% 14.53% 14.00% 4.51% Source: Airtel 2020. PAGE 77 3.5 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 0 Annex 20: Mobile Money Transaction Costs, 2019, TZS Cash to cash transaction cost as share of transaction value 0.4 Vodacom Halotel 0.3 Tigo Airtel 0.2 0.1 0 Source: Operator websites, Nov 2019. Annex 21: Trade in Digital Services, 2005-17 Imports Exports Current Prices, Share of Total Trade Current Prices. Share of Total Trade in US$ millions in Services (%) US$ millions Services (%) 2005 114.851 9.5 168.142 13.2 2006 127.592 10.2 173.014 11.3 2007 219.696 15.5 304.613 16.2 2008 182.939 11.0 301.943 15.1 2009 276.957 16.1 297.86 16.1 2010 257.177 13.6 292.394 14.3 2011 258.54 11.7 345.68 15.0 2012 282.673 12.0 394.972 14.2 2013 246.946 9.9 468.679 14.6 2014 319.519 11.9 459.796 13.5 2015 304.702 11.4 439.854 12.9 2016 277.875 12.5 391.299 10.8 2017 324.337 16.1 419.592 10.9 Source: UNCTAD. PAGE 78 TA N Z A N I A E C O N O M I C U P D AT E J UNE 2020, 14TH EDITION References Airtel Africa. 2020. Report on the results for the third quarter and nine months ended December 31, 2019. https://airtel.africa/assets/pdf/IR_Pack_Q3_20.pdf . Airtel, 2019. Network coverage map. https://www.airtel.co.tz/openNetworks. 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