Tanzania has made important strides in reducing infant and child mortality, but the authorities must act quickly to capitalize on this progress and accelerate efforts to reduce fertility rates in order to unlock the full potential of a demographic dividend, according to a new World Bank report.

The latest 20th Tanzania Economic Update explores the country’s progress towards attaining a demographic dividend, which refers to how improved health and reduced fertility can drive economic growth. When a country experiences better health outcomes and fewer births, its age structure changes. This shift means more people are in the working-age bracket compared to those who are not working, which boosts economic growth and helps reduce poverty.

The 20th TEU titled, ‘Overcoming Demographic Challenges while Embracing Opportunities’, shows that while Tanzania has seen a rapid drop in infant and child mortality over several decades, there has been only a minimal decline in fertility. As a result, the population growth rate remains high, at three percent. At this rate, the population will double in 23 years, increasing demand for social services outstripping the economy's capacity to provide essential services, such as health and education, and create jobs.

“Expediting a decline in fertility rates can unlock strong economic benefits for Tanzania,” said Nathan Belete, World Bank Country Director. “However, achieving these demands robust multisectoral collaboration, uniting various governmental bodies and rallying key stakeholders such as religious and traditional leaders, civil society organizations, parliamentarians, and policymakers.”

The report authors demonstrate how the current fertility affects Tanzania’s spending on education. By 2061, with more children, the cost of public education could rise to 4.1 percent of GDP. But, with fewer children, the cost could drop to just 2.9 percent of GDP, which frees up resources for other important areas like healthcare and infrastructure.

The authors propose several recommendations to accelerate Tanzania’s attainment of a demographic dividend. These include enhancing ongoing programs to expand access to secondary education and strengthen completion rates for girls while not leaving boys behind; scaling up access to high-quality and affordable family planning services; improving child survival to give parents the confidence to have fewer children; and promoting the economic empowerment of women and girls to support their reproductive health and strengthen health-seeking behaviors.

On Tanzania’s economic outlook, the Update shows the economy has been resilient, growing by 5.2 percent in 2023, compared to 4.6 percent in 2022. The services sector remained the main driving force behind Tanzania’s overall economic growth, expanding by 7.3 percent, supported by buoyant economic activities in financial and insurance, transport and storage, and trade and repair subsectors. Despite recurrent droughts and floods, the agriculture sector grew at 3.4 percent in 2023.

However, the concentration of growth in sectors with limited employment opportunities for poor households has led to only a moderate reduction in the national poverty rate, from an estimated 27 percent in 2022 to about 26.5 percent in 2023.

“While annual GDP growth for 2024 is projected at 5.6 percent and offers hope for Tanzania, several threats cloud the economic outlook. Potential risks include slow or incomplete implementation of structural reforms, the impact of climate change on key sectors like agriculture and tourism, and the possibility of a global recession. These risks need to be carefully managed,” said Emmanuel Mungunasi, World Bank Senior Economist.

Distributed by APO Group on behalf of The World Bank Group.