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NDULU: TANZANIA NEEDS MORE EFFECTIVE BUSINESSES TO SUSTAIN ECONOMIC GROWTH - FINANCIAL-24

Bank of Tanzania Governor, Prof Benno Ndulu.

Tanzania needs businesses that manage increasingly complex process of producing, trading and distributing goods and services to contribute to sustainable growth, the Bank of Tanzania Governor, Prof Benno Ndulu has said.

He said in Dar es Salaam on Tuesday that the economy wants productivity that depends on a mixture of increasing organisational efficiency— making labour more efficient at doing what it does—and structural change, moving people from low- to high-productivity activities.

“We need businesses that can manage the increasingly complex processes of producing, trading, and distributing goods in the economy,” he said at the launch of a book he co-authored with top International Growth Centre (IGC) and University of Oxford economists Sir Paul Collier and Professor Christopher Adam.

“We need effective government organisations and public policy to support these processes so they can contribute to sustainable growth that benefits all citizens,” he said. Prof Adam said the book draws on history, academic evidence, and policy experience to explore how Tanzania could unlock its economic potential.

“The ideas presented revolve around the central theme that the future prosperity of Tanzania lies in the country’s ability to nurture effective organisations in both the public and private sectors,” Prof Adam said. At present, however, Tanzania has shortage of effective organisations, he said.

“Those working in the private sector are employed in businesses that are far too small to be productive; those working in the public sector are employed in bureaucracies which, though large enough, are inefficient,” he said.

A book reviewer and an economist, Dr Hildebrand Shayo said the book indicates that to convert good prospects into sustained growth and decisive poverty reduction, requires a degree of good luck, good policy formulation, resources and good economic management.

“These are inspiring words you find from the first pages of the book the moment you open the first folio,” Dr Shayo said in his column last week.

He said the book focuses on topics that genuinely imply the road to prosperity as it explores Tanzania’s economic trajectory since independence.

While the country’s recent economic growth is impressive— averaging 6.0 per cent per year between 1995 and 2015 and the poverty rate falling from 39 per cent to 28 per cent from 1991-2011—the performance is attributable to the liberalisation of the previously heavily constrained economy.

Additionally, the generally favourable economic conditions in Africa in the early 2000s meant that early economic reforms enjoyed the support of strong global demand, and thanks to China adding huge volumes to the global supply, low and falling prices for key imported inputs.

As these trends conclude, sustaining high growth becomes much more challenging for Tanzania, he said.

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