Productive Jobs Necessary for Tanzania’s Fast-Growing Workforce

DAR ES SALAAM, September 12, 2014 – With more than 800,000 job seekers entering Tanzania’s labor market each year, the country must transform itself from a labor force of unproductive jobs to one of more productive industries, according to the new World Bank Group (WBG) study.

The new country economic memorandum, Tanzania: Productive Jobs Wanted, highlights the importance of productive job creation, particularly in light of rapid urbanization and a labor force that will double by 2030. In rural areas, jobs are currently confined to farms, which are on average five times less productive than farms in other areas of the world, according to the study. In cities, the study notes that entrepreneurs are more focused on survival than growing their businesses. At the same time, Tanzania faces three main challenges to job creation; high poverty levels, a mostly young population, and people moving from rural areas to urban centers.

“The growth of productive jobs is vital for alleviating poverty and promoting shared prosperity, two important goals of Tanzania’s economic strategy,” said Jacques Morisset, WBG economist for Tanzania and one of the authors of the report. “Jobs, productive jobs, have to be created with a sense of urgency. Inaction is not an option for the country.”  

The proposed plan identifies three key pillars to address the challenge of job creation; a focus on farms, on small non-farm businesses, and on business expansion into new markets such as the leather industry, high-value vegetables for arms and tourism for exporting services. For each of the three pillars, specific actions have been identified to create a climate for businesses to thrive and generate productive jobs. Key recommendations include:  

• Build small business owners’ assets by promoting the development of skills and fixed capital
• Encourage urban mobility by reducing congestion costs in cities, which can absorb as much as a third of the income collected by a typical worker in Dar es Salaam
• Reduce the amount of resources spent by small firms on administrative and security costs so they can reallocate these resources to productive activities
• Create economies of scale to reduce operating costs by using external sources of labor of financing, and creating opportunities for cooperation
• Move firms out of the informality trap by providing incentives to potential exporters to formalize activities
• Enhance quality at production
• Improve connectivity and market access through improvements in hard and soft infrastructure and through the use of special economic zones
• Think regionally to promote exports given their contribution to employment over the past few years

This study is the culmination of 18 months of forums, business meetings, workshops and focused discussions in Tanzania and abroad with various formal and informal business owners, foreign investors, government ministries, policy makers and experts from the WBG and academia. The goal of the study is to contribute to the debate around job creation by proposing a direction for policy-making.