Posted: Thursday March 01, 2012 3:12 AM BT

Despite the many programmes implemented to reduce rural poverty in Tanzania, and notably rural development strategies comprising agricultural programmes inter alia, rural income has not been well improved; and that remains a critical economic problem.

According to the study on the Determinants of Rural Income in Tanzania (An Empirical Approach) which was funded by REPOA, Tanzania continues to be among the poorest economies in the globe (ranking 152 out of 179 countries recorded in the UNDP human development report, 2008) even after four decades of independence, and this owes mainly to low income, notably in its rural areas.

More than 80 percent of the country’s poor people live in the villages and rely on agriculture as their main source of livelihood. Although human development index for Tanzania rose from 0.4 in 2004 to 0.5 in 2006, poverty is still widespread and acute, and it is essentially a rural phenomenon. Rural dwellers work under cyclical structural constraints and they are subject to frequent natural calamities while at the same time besieged with among others, lack of market linkages, unavailability of credits, absence/poor irrigation schemes, low education and inadequate health services.

The major objective of this study, which was done by Jehovaness Aikaeli, was to estimate determinants of rural income in Tanzania by exploring, among others, the effects of geographical factors.

The household budget surveys indicate higher and deeper poverty in the rural areas than in the urban centres, mainly due to relatively low incomes in the villages. Between 2001 and 2007, poverty decreased but at a slower pace in rural areas than in the urban areas. This shows that besides poverty being more severe in the villages, the alleviation process is less favourable to the poor rural areas than the urban centres. In terms of the head count index (percentage of households below the poverty line), the overall basic needs poverty incidence fell by 2.4 per cent in Mainland Tanzania during 2001–2007, while in the rural areas it declined by 1.3 per cent. During the referred period there was an overall decrease in food poverty in the Mainland by 2.2 per cent in its rural areas it fell by 2.0 per cent.

Analysing the level of education as one of the factors that affect rural per capita income, the study found 16.2 per cent of all heads of rural households surveyed did not attend primary school, while 69.5 per cent got primary education and 14.3 percent managed to have further education, from secondary level to higher education. With regards to non-farm rural enterprises, about 75 percent of all rural non-farm entrepreneurs have primary education and the remaining 25 percent got higher than primary education, but most of them ended at the secondary school level. Education of the household head has indicated a positive impact on per capita income, indicating that, investment in education is income improving.

Looking at access to finance, the study found that 60 per cent of the rural enterprises singled out a problem of little access to loans as an investment constraint in the villages. Because of difficulties involved in applying and receiving loans, only 10 percent of rural households and 19 percent of non-farm rural enterprises indicated demand for loans, and in general only 12 percent of all applications got loans.

Markets inaccessibility is the other main constraint facing rural households. The findings of the study show that transport is one of the severe constraints to the investment climate which holds back the marketing process. In most of the communities roads were only passable seasonally.

With regards to electricity, telecommunications and water infrastructure, nearly 40 percent of surveyed communities were electrified; however, most of the households even in those electrified communities lacked connectivity to power. On average, public electricity supply was for example interrupted 71 times in 2004. Many enterprises and households do not have access to telecommunications altogether.

For example, scarcely 13 percent of all surveyed enterprises had fixed and/or mobile phones. This apparent communication barrier features as one of the major impediments demarcating rural people from access to market information.

The few variables described above show some of the limitations to rural sector performance in Tanzania.

Despite the many programmes implemented to reduce rural poverty, and notably rural development strategies comprising agricultural programmes among other things, rural income had not improved significantly. This, therefore, leaves a number of questions unanswered as to why rural income continues to remain low.

The study recommended that the government put more emphasis on the improvement of schools and their curricula, specifically in the rural areas. Education is imperative to social capital reform and skills development that are part and parcel of rural development, as well as consistent implementation of Land Act reforms to enable more people in rural areas to develop land.

The study further suggests that the supply of necessary equipment at affordable prices will be good motivation to rural producers, as well as encouraging both agriculture and rural non-farm economic activities for quicker income improvement. Empowering women through the provision of adequate education and legal reforms for equal opportunities will have a positive impact on rural income.

The study urges the government to make sure that rural roads infrastructure including bridges should be maintained to remain passable throughout the year in order to help linking markets in addition to the enhancement of communication facilities to offset information problems.. A crucial question of strengthening the capacity of the government to combat calamities particularly in the areas prone to devastating floods and drought is emphasized.

On the government side, its role can be fulfilled in two dimensions: first, through the provision of public goods either from the government, or by public-private partnerships; and second, through its capacity to combat effects of natural calamities when communities are affected. In the first context, market links by means of information and communication through telecoms, and the ease with which roads can connect markets are deemed to be fundamental to rural income generation.

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