Tanzania’s GDP grows 31.4 percent after rebasing

Dariana Tani - February 2015


Key Points
  • Tanzania joins Kenya and Uganda in GDP revision
  • New methodology and classification implemented
  • Agriculture remains the mainstay of the economy


Tanzania has become the latest African country to report that the size of its economy is bigger than previously estimated, following a statistical revision of its Gross Domestic Product (GDP) from 2001 to 2007 constant prices.

The East African country joins neighbours Kenya and Uganda in their recent upward revisions. Official figures, released on 19th December 2014, put Tanzania's GDP for 2013 at 69.9 trillion Tanzanian shillings (US$38.6 billion)[1], 31.4% higher than the previous estimate of 53.2 trillion shillings (See Figure 1 and Table 1). This is the highest revision leading the East African group, followed by Kenya (which rose 25% at the end of September 2014) and Uganda (13% at the beginning of December 2014).[2]

 



Following the revision, GDP growth for 2013 was subsequently reassessed to 7.3% from the previous estimate of 7%, while GDP per capita rose to 1,418,265 Tanzanian shillings (US$784)[3] in the new series from an estimated 1,079,620 shillings (US$597) in the old series.

But the new data, while potentially valuable, does not make Tanzanians any richer than they were before the GDP figures were recalculated. It is merely an improved calculation of the economic data, with the main difference between the old and the new series lying on the methodology and classification adopted. The new GDP series (with 2007 as base year) is based on the 1993 SNA and according to Tanzania’s National Bureau of Statistics (NBS) to an extent on the 2008 SNA. In contrast, the old series (with 2001 as base year) are based on the 1993 SNA.[4]


 

Results of the revision exercise

The revision exercise has captured structural changes in the economy since 2001 (See Figure 2). At the sector level, the share of GDP accounted for by the Agriculture sector rose from 25.9% in 2013 at 2001 constant prices to a new estimate of 31.7% at 2007 prices. The share taken by Industry and Services shrank from 22.2% to 21.7% and from 44.3%to 41.5% respectively.

 

There were also a number of changes in the measurement of the Tanzanian economy within sectors (See Table 1).

 

Within Agriculture, Crops maintained the highest percentage share of GDP (17.7%), followed by Livestock (8.4%), Forestry (3.1%), and Fishing (2.4%).

 

While within Services, some sectors had been overstated, under the previous system. Real Estate shrank from 8.4% in the old series to 3.8% in the new series, as did Wholesale and Retail Trade; Public Administration and Defence; and Transport and Storage; which declined from 12.1% to 10.6%; from 5.8% to 4%; and from 2.5% to 1.3% respectively. However, other services sectors such as Financial and Insurance activities and Education moved up from 1.4% to 2.7% and from 1.4% to 2.7% of GDP respectively.


 

New Services sectors, which had not been recorded in the old series, account for 4.3% of total GDP in the new series. These include Administrative and Support Service activities (2.5%), Professional, Scientific and Technical activities (1.3%), Arts, Entertainment and Recreation (0.3%), and Activities of Households as Employers (0.2%).

 

The revision exercise also revealed that in 2013 the Tanzanian economy was less reliant on Electricity and Gas supply as well as Manufacturing, which declined from 1.8% to 0.8% and from 8.5% to 6.9% respectively. Nonetheless, Tanzania has recently made big natural gas discoveries, with revenues expected to give a boost to the economy by 2020.[5]

Meanwhile, the Construction and the Mining sectors rose from 8.3% to 9.3% and from 3.3 to 4.3% respectively.

 


 

 

Key challenges

While the new GDP figures should give investors more confidence in Tanzania, the growing economy still faces serious challenges.

The country remains largely agrarian, with the results from the revision exercise showing the economy’s shares of industry and services declining while that of agriculture increasing.

Poverty levels are high, inclusiveness of growth is still a challenge and unemployment rates continue to rise.
[6]

 

Also, power availability remains an issue, with the past few months seeing the country subsumed by a mounting corruption scandal over energy deals, and experiencing frequent blackouts that severely hold back productive output.

 

Humphrey Moshi, professor of economics at the University of Dar es Salaam, said to the ‘DailyNews’ in an interview that the government needs to focus more on structural transformation of the economy to support growth of industries and the manufacturing sector to provide a linkage with the agricultural sector. [7]