ECONOMICS A LEVEL(FORM SIX) NOTES – STRUCTURE OF TANZANIA ECONOMY

STRUCTURE OF TANZANIA ECONOMY

1. sectoral pattern
2. ownership pattern

1. Primary sector
2. Secondary sector
3. Tertiary sector

1. Agriculture sector provide employment opportunities too many people that lead to decline in unemployment problem i.e. large percent of Tanzania employment is based in agriculture sector compare to other sectors.
2. Agricultural sector stimulate increase in GNP and economic growth because it contribute large percent of GDP in Tanzania
3. Agriculture sector assist development of other economic sector such as manufacture sector because it provides raw materials and market for that sectors.
4. It helps country to get foreign currencies due to the export of agriculture products abroad.
5. Agriculture sector increase supply of food product that assists satisfaction of human wants
6. Agriculture sector assist reduction of income inequality because it improve development and income to the people in rural areas that reduce personal and territorial income inequality
7. Agricultural sector assist in improvement of economic infrastructural in transport and communication system especially in rural areas.

1. Unfavorable climate conditional i.e. unfavorable temperature and rainfall for agricultural production. This reduces scale of production and gain from agricultural sector because most of Tanzanian’s depends on natural climate.
2. Shortage of market. Agricultural sector in Tanzania limited by small extent of domestic market due to the poverty and international foreign markets due to the competition and low quality of products.
3. Low prices and price fluctuations. Most of agricultural products act as raw materials; therefore they are sold at low price and experience price fluctuation which affect gain/ profit to farmers
4. Pests and disease affect agricultural production and limit scale of production and yields from production and some of diseases affect farms which reduce farmer’s participation in production which lead to low volume of production and agricultural development.
5. Low level of technology. Tanzania has low development of technology and most of farmers use poor tools and old technique of production this hinder quality and quantity of output produced.
6. Poor/ lack of workable government policies and structure. Tanzania government lack a workable agriculture policies and strategies for improving production, government created many policies but they are not actually implemented effectively in practices and there is not well established continuous follow up for evaluating failure and success of policies.
7. Low level of education and training among farmers. Most of famous Tanzania farmers have no relevant knowledge relating with agricultural provided, they use normal practices sector.
8. Shortage of capital. Most of people has no sufficient capital for investing in agricultural sector which cause small scale production and employment of local tools (low technology) which result to low agriculture production
9. Low development of economic infrastructures such as transport and communication system especially in rural areas which hinder development of agriculture sector.

1. Government and NGO’s should provide cheap loans to the people in order to invest in large scale for agriculture development
2. Government and NGO’s should adopt different strategies of improving agricultural sector through improving technology especially agricultural related technology
3. Government should improve economic infrastructures such as transport and communication system, government should increase budget of improving infrastructures in order to facilitate movement of agriculture inputs or final goods (agricultural product) to the market
4. Government should adopt price control policy to the agriculture products in domestic market i.e. price floor in order to promote farmers income and agricultural production.
5. Formation of workable policies and strategies. Government should create a workable and strict implemented and followed agricultural policies and strategies in order to improve agricultural production e.g. tax reduction increase in subsidies
6. Government through different authorities such as crop marketing boards cooperation should conduct research both market research and production research in order to improve agriculture production.
7. The use of irrigation schemes rather than depending on natural climate which is unpredictable.
8. Government and NGO’s should provide relevant agricultural knowledge through school, seminars and short training to farmers.

1. It emphasize small scale production of improved method of production
2. Changing from the use of hand hoe to the use of simple labor saving devices such as ox- plough in production
3. Biological innovations such as the use of better seeds and breed etc.
4. The use of modern fertilizers in production process i.e. industrial fertilizers in order to improve land fertility
5. Provision of production incentives e.g. high price of agricultural products.
6. Research and development in order to find solutions of farming problems. etc.

1. Large scale production which includes establishment of plantation or reopening of existed large scale farm.
2. The use of modern tools like tractors rather than or instead of using hand hoe etc.
3. Improvement of economic infrastructures and storage facilities especially in rural areas.
4. Establishment of authorities and organization together with employment of expertise for improving production and market such as crop marketing boards and cooperation.
5. Applying industrial fertilizers and use of modern seeds in production and irrigation scheme.

1. Perish ability of agricultural products. Most of agricultural products are perishable they cannot be stored for future use therefore they highly supplied when harvested which lead to large fall in price, then there will be series shortage in the future which lead to large increase in price.
2. Agricultural product has long gestation period. During harvesting supply increase that lead to large fall in price but due to long production gestation period supply will fall or remain constant that lead to large increase in price
3. Agricultural product has derived demand. Since they have derived demand fluctuations of price of final goods produced by agricultural product cause large fluctuation of price agricultural products
4. Bargaining power of producing countries /frames most of ago- based economic has low bargaining power which leads to sale of agricultural products at low price and price fluctuations according to the market situation / environment.
5. Agricultural products depend on natural factors such as temperature and rainfall. therefore favorable climate condition will influence increase in production and supply which lead to price fall but unfavorable climate condition discourage production and supply which lead to large increase in price when other factors remain constant.
6. Competition among countries and industrial use of raw materials. Due to competition among countries and use of industrial raw materials like synthetic fibers, or use of raw material saving technique which affect demand for agricultural products and fluctuation of price
7. UN unpredictable production and supply i.e. over production and supply cause fall in price while under production and supply cause rise in price of agricultural production

1. fluctuations of government revenue in an economy spinally ago – based economy like Tanzania
2. Fluctuations of farmers people income because price fluctuations cause fluctuations of sales revenue and income to formers/ people
3. Fluctuation of level of employment i.e. Increase in unemployment i.e. fluctuations of agricultural price affect revenue and agricultural production that lead to fluctuation of employment.
4. It may cause failure of government plans in different economic activities
5. It discourage peoples investment in agricultural production and decline in agricultural sectors due to the loss obtained as a result of price fluctuations

1. Agricultural sector help people/country to earn currency that used for investing in development of industrial sector like purchasing /importing machine and other inputs for industrial production and development.
2. Agricultural sector provide inputs raw materials to industrial sector such as cotton is raw materials for manufacturing clothes: This help to develop industrial development.
3. Agricultural sector provide market for industrial products that stimulate industrial development for example industrial fertilizers purchased by agricultural sector/producers
4. Agricultural sector provide labour reserve for industrial use and industrial development
5. Agricultural sector facilitate improvement of economic infrastructures such as transport and communication system which facilitates industrial development
6. Agricultural sector sometimes facilitate development of technology which may facilitate industrial development when reemployed in industrial sector.

1. Industrial sector increase government revenue become industrial and activities pay tax to the government
2. Industrial sector provide employment opportunities to many people this reduce the problem of unemployment.
3. Industrial sector provide input to other sectors such as agricultural sector like fertilizes, tractors which assist agriculture activities.
4. Industrial sector provide market for other economic sector like agricultural sector since agricultural sector supply product which act as a raw materials in industrial sector such as sisal e.t.c.
5. It facilitates improvement of other economic sectors like tertiary sector i.e. Transport and communication system.
6. Assisting in supplying food product which used to satisfy human wants.
7. Industrial sector facilitate growth of town and cities for example Tanga, Dar es Salaam.

1. Shortage of raw materials/ input used in production of final goods and services. This may be caused by low development of other economic sector like Agricultural sector.
2. Shortage of skilled and efficient labor and management. This contributes to the decline in production and low development of industrial sector.
3. Lack of reliable enough market for industrial product both domestic and international market
4. Lack of reliable power and water supply for industrial use i.e. frequently electricity cut off this limit industrial development
5. Low government support (policy) government has no workable policy of providing subsidies and tax reduction for industrial development
6. Shortage of capital. This limit large investment and production and failure to enjoy economies of scale.
7. High initial and operational cost , this problem arise due to the shortage of inputs and some of them imported abroad that lead to increase in cost (price) of input and lead to low profit
8. Low development of technology. This problem reduce efficiency of industrial that cause low quality of products and low output produced
9. Low development of economic infrastructure such as transport and communication this limit movement of either raw materials from different place to produce area or final goods and services from production area to the market place.

1. Import substitution activities strategy(1961-1975)
2. Basic industrialization industry strategy (1975-1995)

1. To serve the foreign currency reserve formerly used to import goods and services
2. To increase the level of employment of factors of production i.e. labour employment
3. To earn foreign currency from export action of goods and services produced by domestic industries
4. To rise government revenue because industrial will increase tax base and amount of tax revenue collected by government.
5. To stimulate improvement of technology due to technique of production
6. Increase in market for domestic raw materials for example agricultural raw materials
7. Reduction in deficit in the balance of payment because industries increase export while reduce volume of import

1. Import substitution industries require protection this goes against the principle of international trade and reduce gain in international trade and retaliation.
2. Increase in payment abroad due to the increase in import of capital goods used to develop import substitution industries like machines and other inputs (raw materials)
3. Industries increase supply of low quality product and low consumer’s satisfaction due to the use of low technology in production process.
4. Industrial produce more consumer’s goods rather than industries development product ( capital/ capital goods) because capital goods assist further industries development
5. Some of industries produce surplus commodities to the domestic market this may regarded as wastage of resources and loss to the companies/ industries.

1. Shortage of foreign currencies for importing capital goods and technology used in production.
2. Shortage / lack of reliable raw materials which limit production and increase cost of importing of some of raw materials
3. Shortage of skilled and trained labor of producing goods and services in an established industries
4. Lack of reliable power supply this cause rise in cost of production and sometimes failure of production
5. Low management skills among managers and government intervention in industrial activities and decisions
6. Shortage of capital fund for large scale investment this cause small scale production and failure of most of industries to enjoy economies of scale

1. It helps movement of goods and service or raw materials from one place to another i.e. production area to the market place for exchange this done by transport services.
2. It help to make goods available in the markets at the right time when they are needed this done by storage transport and communication service
3. Tertiary sector protect loss in production either on product or firm in general this facilitated by warehouse and insurance services
4. It facilitates trade transaction and saving activities through banking service.
5. It helps to expand the size of market and sales volume through market research which is facilitated by transport and communication system
6. Provide employment opportunity to many people in difference activities done in tertiary sector this reduce the problem unemployment
7. Facilitates increase in government revenue through tax revenue collected in tertiary activities.

1. Public ownership
2. Private ownership
3. Cooperation ownership

1. Public ownership is preferable and assist in smooth provision of basic/important service in an economy in order to avoid competitive supply e.g. elect trial water supply
2. Public ownership reduce the problem of income inequality in the society because of absence of private ownership of major means of production
3. Public ownership facilities/assist provision of goods since private sector fails to afford while government may afford.
4. Public ownership facilitates supply of goods and services which are not profitable but essentials in an economy for example defense and security, public goods like roads
5. Public ownership reduce resources useful competition and utilization of economic resources because government plan on effective and efficient way of utilizing resources
6. Reduce economic instability(crises) such as inflation because government control resources and other problems/instability
7. Playing important role in providing employment to the people i.e. reduce unemployment problem.

1. Most of public ownership firm and companies are not efficient in providing goods and services e.g. TANESCO in supplying electricity this is due to the absence of competition
2. Public ownership may lead to public monopoly and all problems of monopoly markets
3. It may cause resources misallocation of resources due to political and social reasons
4. Public ownership cause low production and supply of goods and services of low quality this cause failure of public firm to enjoy economies of scale. This caused by lack personal commitment and poor management
5. It increase government burden in terms of cost and of operating public enterprises
6. Public ownership reduce consumer’s choice and satisfaction of human wants due to the shortage/lack of varieties of output

1. Private sector increase job opportunities and better payment to many people compare to public sector ownership
2. Most of private sector (firms) are efficient and lead to increase in supply and quality of goods and services.
3. Private ownership /sector facilitate transfer and improvement of technology from one country (MDC’S) to another (LDC’S) like Tanzania
4. Private sector/ ownership help to increase government revenue because they pay tax to the government
5. Private sector stimulate competition which discourage occurrence of monopoly and negative effect of monopoly, also it stimulate efficiency in production.
6. Facilitate effective and efficient utilization of resources in an economy
7. Reduce government burden in control and finance public firms

1. Private ownership sector/cause wasteful competition and utilization of economic resources
2. Private sector increase the problem of income inequality and economic/ regional imbalance
3. It may cause increase in price and cost of living this increase hard ship in people’s life and poor living standards.
4. It may cause failure of government plan because of presence of large private sector which are efficient enough to operate against government will and plans.
5. It may cause cutthroat competition which lead to decline weak firms and unemployment problems.

1. Formal private sector
2. Informal private sector

1. They use small initial and running capital in production
2. They produce in small scale. This is because of using small initial and running capital
3. They use low level of technology and local tools in production
4. Most of them has no permanent places i.e. business unit has no specific and permanent place for their activities

1. Provide employment to many people. This is sector employ many people because Tanzania has large number of less/ uneducated and low income earner. Who has no sufficient fund, so they decided to participate in different work such as tailoring, cookers, carpentry etc.
2. Increase supply of cheap goods and services in the market which lead to increase in consumer’s choice and satisfaction
3. Reduce social evil/ problems in an economy since informal sector provide employment to many people, social evils such as robbery are reduced in an economy
4. Some of informal sector pay tax to the government and other deductions which increase government revenue
5. Reduce income inequality because informal sector improve income to low income earner
6. Stimulate competition with formal and public sector which lead to increase efficient in production and distribution of commodities
7. Increase resources utilization. Since they participate in land utilization and of their natural resources in production process.
8. Stimulate innovation and invention which leads to improvement of technology in production.