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USAID Tanzania: Agricultural sector assessment
2006
USAID

Acknowledgements: FANRPAN acknowledges the DEC website as the source of this report: www.dec.org


USAID Tanzania is developing a ten year program to promote economic growth in the agricultural sector. The broad outlines of this program are described in the results framework shown in Annex 1. This assessment of the agricultural sector is designed to assist in selecting the activities that will achieve the intermediate results and strategic objective.

  1. Growth, poverty and agriculture

    1. The agricultural component of GDP and projections for the future

      Agriculture is the base of the Tanzanian economy, accounting for 45% of Tanzania’s GDP, with industry providing 16% and services 39%.1 This division has remained fairly constant since 1995.

      The overall GDP has grown at an average rate of 5% since 1995. In 2002, the rate was estimated at 6.2% by the Bank of Tanzania, 5.8% by the World Bank and 5.4% by the Economist Intelligence group. These and other institutions are predicting continued growth ranging from under 5% to 6%. This can be compared to a population growth rate of 2.57% Generally, growth is expected to accelerate slightly in the next two years, although there is disagreement on the actual rate.

      • According to the World Bank, growth in 2003 is projected to be 6%, with agriculture, tourism and mining as the driving forces.


      • The Bank of Tanzania attributes their growth estimate of 6.2% in 2002 to mining (15% growth), manufacturing (8% growth) and agriculture (5% growth). This positive performance is credited to structural and macro-economic reforms, and is expected to continue in 2003.2


      • According to the Economist Intelligence Group, growth in 2004 is expected to increase slightly from their 2003 figure of 5.4% to 5.5%, driven by agriculture, mining and infrastructure development.


      • Standard Bank is predicting continued growth of the overall economy of 5.2% in 2003, with growth accelerating to 5.4% in 2004, due to further economic reforms ahead of the Presidential elections in 2005. This growth is expected to come from agriculture and mining.3


      • The CIA World Fact Book estimates growth at 5.2% in 2002 and forecasts continued growth at 5% in 2003, due to continued donor support and solid macroeconomic policies.


      • According to the First National Bank of South Africa, growth in agriculture is not expected to exceed 5% per year over the next two years, due to poor global commodity prices, weak marketing infrastructure, lack of credit and limited access to inputs.4

      One factor which has a large effect on Tanzania’s GDP is the size of the maize crop, because it accounts for more than 30% of the agricultural GDP. The main factor affecting maize production is the weather. For the ‘03/’04 rainy season, the Famine Early Warning System (FEWS-NET) is predicting normal to below normal rainfall in the middle and south of the country and normal to above normal rainfall in the north and west.5 The relatively poor harvest in 2003 has led to higher maize prices in many areas. A poor harvest in Kenya as well has attracted Tanzanian maize, despite a ban on exports. These factors should stimulate increased planting, leading to a favorable season – assuming rainfall is not too much below normal. A larger maize crop should, in turn, support relatively strong GDP growth.

      The following chart shows the contribution of various crops to the GDP over the past five years.6 The columns do not add to 100% because some of the minor food crops have been left off. A more extensive table showing GDP figures for a broader range of crops over 10 years is shown in Annex 2.



      During the late 1980s, cash crop production expanded just 1.8% per year, due to poor performance by Government cooperatives and parastatals. In the 1990s, with liberalization, the growth rate for export crops jumped to 7.7% per year.7 However, from the table above, it is clear why this positive trend has not had much effect on the overall agricultural GDP. Changes in policies related to maize and favorable or adverse weather conditions would have a much greater effect because of the importance of maize in the economy..

      It should be noted that this data, which is drawn from the national accounts that are kept by the National Bureau of Statistics, may be significantly revised in the near future. DFID has an on-going program to revise the national accounts based on historical data from other sources and discrepancies have been discovered in a variety of crops, including maize.

Footnotes:
  1. www.worldbank.org
  2. www.bot-tz.org
  3. Standard Bank, Economic research unit
  4. First National Bank, Emerging markets unit
  5. www.fews.net
  6. National Bureau of Statistics, National Accounts
  7. Tanzanian Agriculture since 1985, IFPRI

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