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World Bank: Zanzibar’s Economic Growth Doesn’t Translate Into Improved Well-being

WB notes that poverty in Zanzibar fell over a decade before the COVID-19 pandemic, but the pace was slow relative to population growth.

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Dar es Salaam. Zanzibar experienced substantial growth in the Gross Domestic Product (GDP) per capita between 2009 and 2019, but the transmission of growth into increased consumption of households was low.

This is according to the new World Bank Group report, Towards a More Inclusive Zanzibar Economy: Zanzibar Poverty Assessment 2022, released on Wednesday, November 9, 2022.

According to the report, household consumption growth during the 2009–2015 period and the 2015–2019 period was moderate and relatively low given the high economic growth that took place.

Real GDP per capita has grown at an average rate of 3 per cent per year and rose from $712 in 2009 to $950 in 2019, an increase of 33 per cent.

Real consumption per capita, as measured by the Household Budget Surveys (HBSs), grew by only 18 per cent between 2009 and 2019.

“Only a little more than half of GDP per capita growth translated into increased household consumption and better welfare, as measured by the HBS,” the World Bank says, “suggesting that quality of growth was insufficient to translate into a commensurate improvement in the population’s welfare.”

According to the assessment, poverty in Zanzibar fell over a decade before the COVID-19 pandemic, but the pace was slow relative to population growth.

Zanzibar’s poverty rate fell by almost one percentage point per year during 2009–2019, falling from 34.9 per cent in 2009 to 30.4 per cent in 2015 and 25.7 per cent in 2019, translating to a 9.2 percentage point drop in 10 years, according to the assessment.

Urban poverty fell much faster, it almost halved while rural poverty saw a relative drop of only 15 per cent.

“This relatively larger decline in urban areas, where poverty levels were already lower, and the slow reduction in rural areas, where poverty was already higher, resulted in a widening of the gap between rural and urban poverty,” the World Bank notes.

By 2019, rural poverty was double the urban rate, it adds.

During 2015–2019, however, rural poverty reduction was faster than in urban areas, but the pace was not enough to compensate for the widening gap between poverty in rural and urban areas in the preceding five years.

Further, at around 2.8 per cent per year, population growth continues to be high relative to the reduction in the poverty rate, the Bank reports.

As a result, the number of poor declined only marginally, and in rural areas, the number of poor people increased between 2009 and 2019.

The World Bank regularly conducts poverty assessments to examine the progress of countries towards the achievement of key development goals, with a focus on reducing poverty and improving a wide range of other social indicators.

The  report recommend a series of policy measures to accelerate poverty reduction.

These include making tourism more inclusive by promoting the establishment of locally owned small accommodation establishments, diversifying to small-group rural destinations and activities including historical/cultural tourism and marine tourism and promoting investment in Pemba.

The authors also believe that improving the business operating and regulatory environment of small and medium enterprises, especially those that source inputs from low-income communities such as seaweed, fish, and other marine products, will be essential for local value addition, job creation and poverty reduction.

Zanzibar Poverty Assessment 2022 was conducted in partnership with the Office of the Chief Government Statistician (OCGS) and is based on the OCGS Household Budget Surveys.

The previous World Bank Poverty Assessment for Zanzibar was published in 2017.

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