OPPORTUNITIES FOR HARNESSING THE DEMOGRAPHIC DIVIDEND IN TANZANIA

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1 OPPORTUNITIES FOR HARNESSING THE DEMOGRAPHIC DIVIDEND IN TANZANIA Eliya Msiyaphazi Zulu, AFIDEP Joel Silas Lincoln, University of Dar es Salaam Presented at the Demographic Dividend Dissemination Seminar, Dar es Salaam, 25 th July

2 Outline of Presentation Africa and Tanzania on the rise - economic opportunities for achieving socioeconomic transformation Population Change and development in Tanzania Demographic Dividend lessons from East Asia Turning Tanzania s population dynamics and economic opportunities for harnessing the demographic dividend Policy and investment options for harnessing the demographic dividend in Tanzania 2

3 Africa on the rise growing economic opportunities and unprecedented growth Economies expected to continue growing at a steady rate, despite global recession In 2014, Sub-Saharan Africa economies to grow by 6.1% (global average of 4%) IMF, April 2013 Foreign Direct investment projected to increase from $37 in 2012 to $54 billion in 2015 Infrastructure development is improving across the continent, especially in East and Southern Africa "It is expected that by 2020, only four or five countries in the region will not be involved in mineral exploitation of some kind (World Bank) Diaspora remittances playing a key role in development Most countries have long-term development strategies to guide socioeconomic transformation 3

4 Reality Check: Africa s economic boom is not reducing poverty & creating enough jobs High levels of underemployment and reliance on the informal sector, especially among women and youth Heavy reliance on mining and mineral resources, which are often mismanaged and are not labour intensive Agricultural sector, which provides livelihood to most people, is still largely underdeveloped and vulnerable to climate change Rapid but poorly managed urbanization not effectively used as an engine for socioeconomic development "Better governance will need to underpin efforts to make growth more poverty reducing," (World Bank) High child dependency burden one of the key factors undermining development if quality human capital and poverty reduction 4

5 Population dynamics and the African Century Africa is undergoing phenomenal population changes and has immense economic opportunities Population projected to grow from 1.2 to 2.4 billion by 2050 Majority of African to live in Urban areas by 2050 Migration likely to increase, with increasing regional integration and globalization High child dependency burden a key barrier to development But if mortality and fertility decline rapidly, child dependency burden will decline and having more people of working age a can provide a valuable impetus for accelerated economic growth 5

6 Population sizes will at least double in all EAC Member States by 2050 Past and Projected population size (Millions) Burundi Kenya Rwanda Tanzania Uganda TOTAL Source: United Nations Population Division Medium Variant UN Projections 2012 Edition 6

7 Tanzania is guaranteed to have a big population due to high population momentum, it s time to focus on building quality human capital Population growth by year when replacement level fertility is reached UN Medium Variant, 2011 (2010) 25.3%, (2010) Source: AFIDEP and Venture Strategies for Health and Development,

8 Urbanization is on the rise what will this mean for socioeconomic development for East Africa? Past & projected % of population living in urban areas Burundi Kenya Rwanda Tanzania (53%) Uganda Source: United Nations Population Division Medium Variant UN Projections 2014 Edition 8

9 As fertility declines, child dependency ratios will decline and working age population will increase, creating a window of opportunity for accelerated economic growth Past and projected trends in Child dependency ratios Burundi Kenya Rwanda Tanzania Uganda Source: United Nations Population Division Medium Variant UN Projections 2012 Edition 9

10 Defining the Demographic Dividend The Demographic Dividend is the economic benefit arising from a significant increase in the ratio of working-aged adults relative to young dependents. When birth rates decline significantly, the age structure shifts to have more working-aged adults, opening a window of opportunity for accelerated economic growth through increased productivity, greater household savings, and lower costs for basic social services for children.

11 Asian Tigers: Success Story Between ¼ to 1/3 of economic growth since 1970 in East and South East Asia can be attributed to the Demographic Dividend (Bloom and Williamson, 1998; Mason, 2001) The economic success was made possible by sustained investments in education, health, family planning, and economic reforms 11

12 Tanzania is Ripe oo Initiate And Fast-track Its Demographic Dividend Journey Steady economic growth over the past decade (7.0%) Discovery of natural gas and other minerals Increasing direct foreign investment for extractive sector and infrastructure development Growing regional integration and links with emerging development partners China Increasing communication (mobile phone boom) Youthful population and abundant labour force 12

13 Tanzania s long term vision is vital for attaining socioeconomic transformation Vision 2025: Transform Tanzania from a least developed country characterized by low productivity agricultural economy to a semi-industrialized middle-income country with a modernized economy and high quality human capital Achieve quality and good life for all, with access to universal primary education and quality primary healthcare Good governance and the rule of law with a culture of accountability Building a strong, stable and resilient economy with an annual growth rate of 8% or more Big Results Now initiative adopted to address Vision 2025 implementation bottlenecks using Malaysia as the benchmark 13

14 Tanzania is committed to the Addis Ababa Declaration on the DD Tanzania is a signatory to the September 2013 Addis Ababa Declaration on Population and Development in Africa Beyond 2014 Endorsed the regional report Harnessing the Demographic Dividend: The future we want for Africa The AU urged all African countries to integrate demographic dimensions in all development programmes, and strengthen the link between the demographic dividend and economic growth.

15 Can Tanzania emulate the development Indicator path achieved by Malaysia? Malaysia Tanzania Malaysia Tanzania GDP per Capita , Total Fertility Rate Under five mortality Rate Net Secondary School Enrolment Rate (%) Gross Tertiary Enrolment Ratio (%) Sources: National Bureau of Statistics (Tanzania); United Nations Population Division and World Bank 15

16 Tanzania and Malaysia s age structures differ remarkably due to differences in birth rates Source: UN Population Division, (Medium Variant), 2012 and National Bureau of Statistics, Tanzania 16

17 Policy wheels for creating and earning the demographic dividend Source: Adapted from African Union Commission (2013) 17

18 Pathways for Accelerated Economic Growth through the Demographic Dividend 1. The first Demographic Dividend: Increased productivity from surplus labor supply generated through: Rapid fertility (and mortality) decline Productive employment of the extra workers Greater involvement of women in the labour force 2. The Second Demographic Dividend: Increased savings and investment due to higher incomes and reduced child dependency burden: Increased savings and investment capital stock Improved human capital due to higher investments in health and education and reduced childbearing burdens for women Growth in domestic demand and purchasing power due to higher incomes 18

19 Speeding the Demographic Transition Reduce child mortality replacement effect Enhance education, particularly female school enrollment and general female empowerment Expand access to family planning, focusing on underserved sub-groups such as youth 19

20 African countries still need to do more to reduce child mortality Infant mortality rate South Korea 3 Thailand 11 Malaysia 7 South Africa 45 Tunisia 16 Uganda Tanzania Rwanda Kenya Burundi

21 There is urgent need to address relatively early entry into marriage in West, Middle, and East Africa % of women aged who got married by age 18 45% 42% 41% 42% 40% 35% 30% 25% 20% 17% 15% 10% 5% 0% Middle Africa East Africa West Africa North Africa Southern Africa 6%

22 Governments and development partners must pledge universal secondary education, especially in West, Central and East Africa % of secondary school age boys and girls who are enrolled in school 100% 90% 92% 88% 80% 70% 60% 68% 70% 50% 40% 30% 25% 40% 39% 32% 27% 37% 20% 10% 0% Middle Africa East Africa West Africa North Africa Southern Africa Girls Boys

23 Fertility rates have declined considerably in some African countries The same can happen in Tanzania if the right policies are followed Morocco Botswana Tunisia South Africa Namibia Source: UN Population Division,

24 Caution: Accelerating the demographic transition is not sufficient to harness the demographic dividend as shown by Tunisia s experience Source: UN Population Division, 2011 (Medium Variant) 24

25 In order to EARN the demographic dividend countries should speed-up fertility decline and invest in the other four policy wheels Source: Adapted from African Union Commission (2013) 25

26 Modeling the Potential Impact of the Demographic Dividend in Tanzania Joel Silas Lincoln University of Dar es Salaam 26

27 Study Objectives 1. Examine Tanzania s prospects of harnessing the demographic dividend in the light of Vision 2025 and aspirations to follow Malaysia s development plan as articulated in the BRN initiative. 2. Enhance understanding of the demographic dividend concept and outline policy options that can be used by different stakeholders to optimize the country s potential and chances of seizing the demographic dividend 3. Explores relative impact of various demographic and economic policies on the country s development prospects between 2010 and 2050

28 Study Methodology Data analysis involved the computation of statistics such as ratios, and trends analysis using charts and tables, etc. Review of past and current economic and demographic opportunities and challenges Modeling of potential impact of the demographic dividend on socioeconomic development using the Future Group s DemDiv modeling tool Done through a workshop involving researchers from all institutions involved Determine key policy options for harnessing the demographic dividend 28

29 Modeling Policy Scenarios Scenario Business as Usual Economic Emphasis Key characteristics Slow progress in economic reforms and demographic transition to continue Maximize Tanzania s global economic competitiveness, and productive efficiency, and governance as outlined in Vision 2025 and BRN Initiative Economic Emphasis Maximize global economic competitiveness and improve and Moderate FP and investments in education and moderate investments to Education reduce fertility to the Malaysia fertility rate Combined Economic Simultaneous prioritization of investments in Economic and FP/Education reforms as well as prioritization of FP and Education to Emphasis reach the current levels for Malaysia and other middle income countries 29

30 Key Modeling Results 30

31 The business as usual model will have a high child dependency burden while the combined model will provide a huge labour surplus by 2050 Business as Usual, 2050 Combined Scenario,

32 Policy scenarios that include prioritization of FP and education will help the country seize a bigger demographic dividend $10,000 $8,000 $6,000 $4,000 Projected GDP Per Capita per policy scnerio (US$) Business as Usual Econ Emphasis FP/Ed Emphasis Combined 9,018 7,316 5,871 $2,000 2,513 $

33 Simultaneous prioritization of economic and demographic investments would generate a demog. dividend of US$ 3,147 GDP per Capita (US$) , ,871 7,316 Demographi Dividend earned USD 3, , Baseline (2010) Business as Usual (2050) Economic Emphasis (2050) Economic Emphasis Combined Scenario & moderate (2050) FP/Education (2050) 33

34 The combined scenario will have the greatest impact in poverty reduction Human Development Index by policy Scenario Business as Usual Combined FP/Ed Emphasis Econ Emphasis

35 HDI Ranking HDI will increase from to if the government adopts only the economic emphasis scenario, moving Tanzania s global ranking from the 2010 level of 132 to 117 according to the 2010 ranks The index would rise to if Tanzania adopts the economic scenario with moderate family planning; ranking Tanzania at position 112, according to the 2010 ranks. Poverty reduction will be maximized, with the human development index rising to 0.726, if Tanzania adopts the combined scenario where it prioritizes both the economic and demographic factors. Tanzania would rank position 96 based on the 2010 ranking.

36 Gap between labor force and employment projections will be much bigger with the business as usual scenario Gap Between Labor Force and employment 25,000,000 Business as Usual 20,000,000 15,000,000 10,000,000 5,000,000 Econ Emphasis FP/Ed Emphasis Combined 19,334,043 7,465,412 4,373, ,459 2,031,

37 Capital formation will be enhanced with policy scenarios that emphasize both economic reforms and FP/Education $3,000 $2,500 $2,000 $1,500 Investment per capita (US$) Base Econ Emphasis FP/Ed Emphasis Combined 2,570 2,017 1,592.9 $1,000 $ $

38 Summary of Other Key Findings Indicator Baseline (2011) Business as Usual Economic Emphasis Only Economic Emphasis & Moderate FP and Education Scenario Combined Scenario Total Population (million) Population <15 (%) TFR (Number of children per woman) Per capita GDP (USD) 514 2,513 5,871 7,316 9,018 Life expectancy at birth Dependency ratio Gap between population 15+ and Employment - Millions Percentage of labour force employed Capital Formation US$ ,608 2,036 2,594 38

39 Policy Actions for Harnessing the Demographic Dividend in Tanzania 39

40 What should Tanzania do to accelerate fertility decline? Reduce child mortality replacement effect Enhance education, particularly female school enrollment and general female empowerment Expand access to family planning, focusing on underserved sub-groups such as youth 40

41 Addressing the high levels of unment need for contraception will help accelerate fertility decline in Tanzania Pemba South Pemba West Town West Zanzibar South Zanzibar North Manyara Mara Mwanza Kagera Shinyanga Kigoma Rukwa Tabora Singida Mbeya Iringa Ruvuma Mtwara Lindi Dar es Salaam Pwani Morogoro Tanga Kilimanjaro Arusha Dodoma National Mordern CPR Source: Demographic and Health Survey, Unmet Need for FP 16 41

42 Demand for large families is high is high yes, but Tanzanian women are also having more children than they would like to have due to lack of access to FP / / Total Fertility Rate Wanted fertility Rate Source: Demographic and Health Surveys 42

43 Efforts to increase contraceptive use should prioritise improvement of quality of care and addressing health concerns about FP Reasons for not Using Contraception, Tanzania % 21% Access Health concerns Cultural 65% Source: Demographic and Health Survey,

44 Tanzania has made good progress in reducing child mortality, but prevailing rates are still quite high relative to rates for middle income counties Neonatal Mortality Infant Mortality Under -5 Mortality Source: Demographic and Health Surveys 44

45 All stakeholders should step-up efforts to reduce the high levels of teenage childbearing 30 % of adolescent women aged years who have begun childbearing Burundi (2010) Kenya (2008/09) Rwanda (2010) Tanzania (2010) Uganda (2011) Region (around 2010) Source: Demographic and Health Surveys 45

46 Policy actions for accelerating fertility decline in Tanzania 1. Operationalize FP2020 commitment to double the number of family planning users to 4.2 million and reach a national contraceptive prevalence rate of 60% by Increase national budget allocation for FP commodities and educational campaigns. 3. Enhance technical capacity of FP programmes to address barriers of demand, access & use of FP Focus on underserved groups, increasing method choice & commodity security, task shifting and scaling up community-based services. 46

47 Policy actions for accelerating fertility decline in Tanzania (cont.) 4. Prevent early marriages and teenage childbearing by promoting school progression and improving access to FP by adolescents. 5. Reinforce interventions to reduce child mortality through immunization, IMCI, nutrition, ITNs, etc. 6. Reinforce public-private partnerships in delivery of FP services. 47

48 In order to EARN the demographic dividend countries should speed-up fertility decline and invest in the other four policy wheels Source: Adapted from African Union Commission (2013) 48

49 Enhancing the steady economic growth achieved over the past decade would help Tanzania harness the demographic dividend Source: Research and Analysis Working Group, United Republic Trends,

50 But Tanzania s steady economic growth is a jobless one Growth mostly driven by sectors with low job multiplier effects Agricultural sector, which support livelihood for 74% of Tanzanians has only grown at 4.2% and received minimal investment Levels of underemployment remain high, especially among women and youth Poverty Headcount Index declined only marginally from 35.7 in 2001 to 33.6 in

51 Tanzanian women exhibit high rates of economic participation - more should be done to move them to the formal sector Income per Capita and Female Labor Force Participation, 2000 Source: Canning,

52 What Tanzania should do to enhance economic productivity and job creation 1. Speed up industrialization and prioritize investment in sectors with high job multiplier effects. Build industrialization from the agricultural base through value-addition industries. 2. Invest in development of economic infrastructure including energy, transportation, and communication to reduce the costs of doing business and attract domestic and foreign investment. 52

53 What Tanzania should do to enhance economic productivity and job creation (cont.) 3. Improve urban planning and governance and development of urban economic infrastructure to turn Tanzania s rapid urbanisation into a valuable engine for socioeconomic transformation 4. Effect industrial policies, strategies and interventions to promote growth of indigenous firms and entrepreneurship. 53

54 Education Challenges in Tanzania Despite good progress on universal primary education, dropout rates remain high and progression to secondary school is low Quality of education is deteriorating at all levels and many children lack adequate literacy skills Progression to tertiary institutions is very low and marked by huge gender inequities In general education systems are failing to produce graduates with economic skills needed to build a globally competitive economy 54

55 What Tanzania should do to fast-track education reforms to have skilled and innovative labour force 1. Increase budgetary allocations to education to improve infrastructure, teaching materials, and student/teacher ratios. 2. Restructure education systems to prioritise universal secondary and higher education. 3. Address underlying causes of deteriorating quality of education at primary, secondary and tertiary education levels. 4. Incorporate in school curricula practical approaches for enhance of leadership skills of young people to turn them into strategic agents of social change. 5. Address the huge geographical inequities in education coverage and gender differences at tertiary level. 55

56 Reform education system to focus on innovation, skills development, science & technology, and entrepreneurship Albert Gonzalez Farran/UNAMID 56

57 What Tanzania should do to improve the health status of the population and labour force 1. Increase budgetary allocations and investments in health to at least meet the Abuja target of 15% of national budget. 2. Improve health infrastructure and systems, including hiring more health workers, training and job retention incentives; supply chain management to ensure commodity security; referral and M&E systems. 3. Expand provision of maternal and child health care services, including child nutrition, through health promotion and community based services in rural areas in order to reinforce recent gains in child survival 4. Reinforce capacity to address pervasive diseases like HIV/AIDS and malaria and emerging ones like non-communicable disease 5. Reinforce public-private partnerships in health care delivery 57

58 What Tanzania should do to improve governance & accountability 1. Reform macroeconomic policies and financial institutions to promote private savings and domestic as well as foreign investment 2. Strengthen governance, national security and anticorruption systems in order to optimize investor confidence and ensure all public resources are used for national development 3. Improve efficiency and accountability in delivery of public services by improving local technical capacity in effective priority setting, resource allocation, program design, implementation and monitoring. 4. Adopt policies and laws that empower women and enhance their leadership roles and equitable participation in the labour force. 58

59 In order to harness the demographic dividend, Tanzania needs to adopt an integrated and people centered development paradigm Guttmatcher Institute Albert Gonzalez Farran/UNAMID 59

60 YES, Tanzania can harness the demographic dividend, but much more needs to be done 1. Enhance political will and investments for strong family planning programs, education, and general empowerment of women 2. Enhance investments in public health for greater child survival and healthy workforce 3. Adopt economic policies and reforms that help develop industries of comparative advantage to ensure mass job creation and enhance savings and investments 4. Improve governance and accountable use of pubic resources invest in people!

61 Next Steps 1. Produce advocacy materials from the technical report and other demographic dividend studies 2. Engage all stakeholders particularly in government to enhance application of the findings in planning processes 3. Develop sector-specific and global action plans 4. Conduct capacity building in systems approaches to integrated development planning and programme implementation 5. Conduct further analyses to determine specific policy actions and update current analysis as new data, analytical tools and issues emerge 61

62 Acknowledgements Pathfinder International (Tanzania) Mustafa Kudrati Patrick Kinemo Pasiens Mapunda Josiah Otege School of Economics, University of Dar es Salaam Joel Silas Lincoln Wilhelm Ngasa Eliab Luvanda John Mduma African Institute for Development Policy (AFIDEP) Eliya Msiyaphazi Zulu Eunice Mueni William Rose Oronje Samson Wasao Health Policy Project, Futures Group Scott Moreland 62

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