Economy growth falls as power shortages bite

Dr Ngowi
Tanzania’s economic growth slowed down in the fourth quarter of last year to 6.5 per cent from 6.7 per cent during a similar period the year before due to poor power supply.

The Gross Domestic Product (GDP) report released this week by the National Bureau of Statistics (NBS) said the growth rate of electricity fell to negative 1.7 per cent in the fourth quarter of last year compared to 9.7 per cent in the similar quarter of 2010.

 This, says the report, was caused by a decrease in electricity generation due to low water level at the hydro-dams and a shortfall in electricity generated from gas caused by stoppage during the maintenance of gas turbines.

“During the period under review, there have been a number of challenges that had negative impacts on the economy, especially manufacturing and electricity activities. The challenges included a fall in electricity generation and that had negative effect on manufacturing,” the report said.

According to data compiled by The Citizen, the economy in 2011 grew at an average rate of 6.4 per cent compared to 6.5 per cent in 2010. Growth projections for 2011 were 6.0 per cent and this year the government expects the economy to grow at the rate of 7.2 per cent.

In the first quarter of 2011 the economy grew by 5.8 per cent, jumping to 6.7 per cent in the second quarter and then to 6.4 per cent in the third quarter, data from the NBS indicate.  The slow growth comes against the backdrop of high inflation as well as dwindling government revenue.

Economists said the slow growth raises concerns and should serve as a wakeup call to the government to take steps to increase production.

The energy and minerals departments should put in place strategies to ensure reliable supply of energy.
“The direct influence of energy in economic growth remains an interesting question to deal with, as both agricultural and industrial activities depend mostly on it,” said Prof Delphin Rwegasira from the University of Dar es Salaam

Prof Rwegasira, who also serves as Mwalimu Julius Nyerere Professorial Chair in Development at the Dar es Salaam university, said the low growth of last year was anticipated due to power production shortages that persisted throughout most of the year.

Other economic sectors that recorded dismal growth rates, in addition to electricity, were manufacturing, agriculture, transport and communication.

Mining and quarrying, construction and fishing posted a higher growth rate. Reacting to the report on the sector’s growth figures, experts raised the alarm over the fact that there was higher growth mostly in sectors that do not impact directly on the lives of the people.

“While it is the mining sector that most of the time drives economic growth, still, it is like an enclave. There is little or no linkages with the rest of the economy to benefit the people,” commented Dr HonestNgowi from Mzumbe University’s Business School.

For the national economy to transform the quality of people’s lives, key sectors like agriculture, health, education, electricity and infrastructure have to grow faster.

According to the NBS report, growth rate in agriculture was 3.0 per cent in the second quarter from 3.3 per cent it recorded in the same period the year before.

“The performance was on account of favourable rainfall received in the regions that are potential for agricultural production during the period under review,” notes the report.

Mining and quarrying recorded a growth rate of 1.2 per cent in the in the same period from negative 9.1 per cent the same period in 2010, while construction posted a growth rate of 8.1 per cent from 1.0 per cent in the same period.

At the same time, financial intermediation recorded a growth rate of 13.3 per cent from 6.0 per cent in 2010. Transport and communication recorded a growth rate of 10.8 per cent in the fourth quarter compared to 17.2 per cent in the same quarter of 2010, while electricity recorded a negative growth rate of 1.7 per cent compared to 9.7 per cent in 2010.
Source: The Citizen,www.thecitizen.co.tz, reported by Felix Lazaro and Veneranda Sumila
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