Putting Tanzania's Hidden Economy to Work: Reform, Management, and Protection of Its Natural Resource Sector (Country Studies)

Putting Tanzania's Hidden Economy to Work is part of the World Bank Country Study Series. These reports are published with the approval of the subject government to communicate the results of the Bank's work on the economic and related conditions of member countries to governments and to the development community. Tanzania's annual real economic growth rate has in recent years been between 6 and 7 percent with Gross National Income equivalent to about US$340 per person. A "hidden" economy could potentially have contributed an additional US$100 per person. Forestry, fisheries, mining, and wildlife make traditional contributions to the economy. Hidden values and untapped potential remain uncounted. Some 582,000 tourists visited Tanzania in 2004, contributing US$750 million to export earnings. A recent single shipment of illegal ivory left Tanga, valued at US$200 million. Commercial fishing fleets operating offshore contribute in excess of US$300 million to foreign coffers; less than 2 percent finds its way back to Tanzania. Most of the production from half a million artisanal miners leave the country unnoticed and untaxed. This book is about this hidden part of the economy - the uncounted, the illegal, the unnoticed, or the squandered. This paper advocates a three-pillared approach to improve capture of this hidden value. The firs pillar of good governance eliminates corruption, improves transparency, controls illegal activities, and improves accountabilities, monitoring, and compliance. The second pillar of good management eliminates price distortion, improves capture of resource rents, and reduces waste. A third pillar of safety nets reduces conflict and social vulnerability.