There is a strong case for strengthening policies to fight inequality in Tanzania. In recent years, income inequality has increased, as has its concentration into the hands of the wealthiest. It is therefore concerning that Tanzania’s overall commitment to fighting inequality needs more effort. It currently ranks 130th of 158 countries globally, and 12th of 15 in SADC.
The country’s recent records on labour rights and public services are particularly concerning; it ranks respectively lowest and second lowest within SADC. Minimum wages are inadequate, and there is very high wage inequality (with a wage Gini of 0.68). In addition, 83% of workers have no formal labour rights, and there is poor enforcement of labour standards and laws to protect women’s labour rights.
There is also a significant hill to climb on public spending to reduce inequality; government expenditure on education, health and agriculture falls short of internationally agreed targets, at 14%, 5.3% and 1.3% respectively. As a result, the vast majority of citizens (86%) are not covered by a single social protection benefit, and 57% of Tanzanians lack access to health services.
Tanzania performs better on taxation; it reduces inequality through tax more than any other country in Africa, and is second globally. That said, there are areas that require improvement. For example, Tanzania collects only 22% of the tax it should, the top personal income tax rate is too low, and the VAT is high and doesn’t exempt basic foodstuffs.
The government must act on the policy and spending gaps identified in this profile, particularly in the context of COVID-19 which demands urgent and permanent investment in the country’s health system and social protection coverage. This increased need, along with high levels of debt service (seven times as much as health spending), means there is also an important role for the international community to play. More must be done to secure debt relief, and the additional financial support the government needs to scale up investment in inequality-reducing policies.