We use methods developed by the Commitment to Equity and data from the 2011/12 Household Budget Survey to assess the effects of government taxation, social spending and indirect subsidies on poverty and inequality in Tanzania. We also simulate several policy reforms to assess their distributional consequences. We find that Tanzania redistributes more than expected given its relatively low income and inequality, largely because both direct and indirect taxes are more progressive than in other countries. Tanzania's nascent conditional cash transfer program has an excellent targeting mechanism. If the program were expanded to a size that is typical for lower-middle income countries, it could reduce poverty significantly. On the other hand, electricity subsidies are regressive despite attempts to make them more pro-poor with a lifeline tariff.

We study poverty dynamics and vulnerability in Tanzania between 2012 and 2018 using synthetic panel methods. Under the surface of apparent stability in aggregate poverty rates, and despite robust economic growth, households experienced strong fluctuations in consumption levels during this period: 12.5% of the population remained in persistent poverty, a further 30% experienced transient poverty, and one of five Tanzanians above the poverty line in 2012 was poor 6 years later. Education and employment in the nonfarm sector are particularly effective at shielding households from poverty, while rural and large households with many children are most likely to slip into poverty. Considerable differences exist between less‐deprived areas such as Dar es Salaam or Kilimanjaro and regions in the northwest, where persistent poverty is especially high. Looking ahead to the impact of COVID‐19, those households least prepared to take preventive measures against the virus suffer from more adverse poverty dynamics, while those involved in the sectors taking the hardest economic hit from the pandemic start from a better pre‐pandemic situation. This suggests that novel policies that specifically support this ‘new vulnerable’ need to be combined with redoubled efforts to address the structural causes of poverty and vulnerability.

No abstract

No abstract

No abstract