Transcript Progress in poverty reduction

Progress in poverty reduction in Tanzania
2000/01-2007
Assessment and way forward
PRBS Development Partners
Presentation at the 2008 Annual Review of Budget Support
OUTLINE
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Are the Government’s latest poverty data
reliable?
What do they say?
What may have happened to explain what
the data show?
The way forward.
Are the Government’s latest poverty
data reliable?
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Some questions have been raised recently
with DPs on the reliability of the 2007
Household Budget Survey poverty data
Comparability:
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Between 2000/01 and 2007
Between Tanzania and other countries
Consistency:
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Internal to HBS data
External, with CPI or GDP
Comparability
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The poverty line from 2000/01 was used and
costed in Tshs. (not in PPP US$).
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The basket on which the poverty line is based
costed 7,253 Tshs. in 2000/01
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The inflation rate associated with this basket is
93%
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(equivalent to 10.6% annual inflation over 6.5 years:
7253*1.106 exp(6.5)=13,998.)
So poverty line for 2007 is 13,998 Tshs.
Comparability
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International comparators
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Other countries measure poverty in very similar
ways
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Poverty line is determined according to
international best practice
Some use diary, some recall to measure
consumption
Diary is thought to be more precise
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Customary not to price the user value of consumer
durables and housing
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Treatment of health and education expenses varies
between countries
Consistency
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How can the modest increase in private
consumption of the basic goods basket be
consistent with higher ownership of consumer
durables?
1.
Because of the drop in price of consumer
durables, the value of assets has remained
about constant although the quantity has
increased.
2.
Durables can reflect purchases since 2001,
while consumer goods basket is just for 2007.
Consistency
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The inflation rate calculated in the HBS is much
higher than CPI or GDP inflation indexes.
Some discrepancies are normal, as these are
different indexes.
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The CPI is based on a limited number of major urban
centers, HBS covers entire nation.
GDP deflator is at factor cost; HBS deflator at market
prices
There are some well documented shortcomings with
CPI.
Are the Government latest poverty data
reliable?
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Overall answer is YES
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Well done NBS !
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Tanzania Statistical Master Plan will
strengthen production and quality of
statistics
What do the data say?
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Improvement in basic-needs income
poverty has been disappointing
Significant improvement in consumer
durables ownership
Ownership of productive assets in
agriculture has gone down
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Access to social service has been mixed
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Nutrition has improved.
Poverty incidence
Little progress towards income poverty MDG
Actual poverty
MDG 1 target
Trendline required to reach MDG
45
40
35
30
25
20
15
10
5
0
1991/92
2000/01
2007
2015
Year
The nation is even more off-track to achieving the income poverty MDG in 2007
than it was in 2000/01
Little progress towards income poverty MDG:
Other countries have done much better
100
90
80
Tanzania
Uganda
70
Ghana
Vietnam
60
50
40
1991-1992
2004-2007
Between 2000/01 and 2007 the number of poor in Tanzania increased by 1.3
million.
.00001
Density
.00002 .00003
.00004
.00005
Still, income poverty MDG can be
achieved!
0
Poverty line
0
20000
40000
60000
Consumption per adult equivalent
80000
… if consumption growth is 3.2 percent per capita per year.
Other measures of welfare...
nutrition is on track with risk
Actual nutrition
MDG 1 target
Trendline required to achieve MDG
35
Underweight
30
25
20
15
10
5
0
1991
1996
1999
Year
The nation is on-track to achieving the nutrition MDG.
But concerns about the worsening composition of diet
2004
2015
Other measures of welfare...
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Ownership of consumer durables
Ownership of non-agricultural productive assets
Housing conditions
Net enrollment in primary education (59% to 84%)
Health care (less costly)
Food share
Ownership of productive agricultural assets
Access to clean water
Inflation (10.6% instead of 5.9%)
Nutrition: composition of diet of he poor
Access to health services stable
Value of assets
No change in inequality!
-5
0
5
10
15
Growth incidence, Tanzania Mainland, 2001 - 2007
0
10
20
30
40
50
60
Consumption percentiles
70
80
90
100
What may explain what the data show?
GDP up by 32% between 2000/1 and 2007
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Not increased inequality
Not household consumption
Government consumption
Investments in capital intensive sectors
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Maybe there was less growth
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(up 5%)
(up 102%)
(up 88%)
Did agriculture really grow with 12% per capita?
Consumption growth of rural households
-10
0
10
20
Growth incidence, rural areas, 2001 - 2007
0
10
20
30
40
50
60
70
80
90
100
Consumption percentiles
Broad-based agricultural growth, based on deregulated food and crops
markets has been shown to be key to boost the incomes of rural
households
What may explain what the data show?
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Limited increases in household income are behind the
modest growth in private consumption.
Changes in relative prices are behind changes in asset
ownership (and change in food share?).
Increase in aggregate demand seems behind changes in
overall price level.
Together it suggest rigid supply, indicating the
seriousness of well known infrastructure and regulatory
constraints for the private sector
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Progress was recorded where supply was flexible (imports).
The way forward:
A multidimensional growth challenge
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In rural areas, income growth is needed to reduce poverty.
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Enhance profitability of agriculture
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Investigate importance of regulatory and institutional constraints.
Need to re-energize policies for a good investment climate
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Government is focused on infrastructure, but major other bottlenecks
remain (e.g. port)
The continued presence of heavy regulation, unpredictable policy moves
(e.g. maize export ban), weak progress on land issues continues to weight
heavily on the investment climate.
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make it attractive to invest in productive assets instead of consumer
durables.
make it attractive to work rather than to go to school
Investigate welfare gains made through imports of cheap consumer goods
Macro-economic stability needs to be re-emphasized
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10.6% inflation per year is too high for comfort.
High levels of public spending are possible without causing inflation
provided there is a supply response.
Business environment
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Private sector environment is highly challenging
and reforms have been slow.
BEST program is unsatisfactory
All Tanzania’s business environment ratings are
low and are not improving
How can policies and their implementation better
address these challenges?
Looking ahead …
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Recent results on income poverty are disappointing and speed of
income poverty reduction needs to improve.
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Without a change of direction and increased pace, MKUKUTA
objectives and MDGs will be at risk.
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More analysis is required to inform and address more effectively the
challenges highlighted by the recent data.
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Opportunities for dialogue on results are critical to DPs.
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Looking forward to discussing how to take joint actions to improve the
outcomes for Tanzanians.
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With improved capacity in data analysis and performance
measurement, how will this be used effectively in decision-making?