Executive summary
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Introduction
The MKUKUTA Annual Implementation Report 2006/07 (MAIR) is one of the outputs of the Government’s monitoring system. The objective of the Government in producing this report is to contribute to the overall Government reporting system that includes output reporting by MDAs, LGAs and non-state actors implementing MKUKUTA activities. The report is based on analysis of progress at goal level and provides an overview of the performance, challenges, lessons learned, and the next steps within each MKUKUTA cluster. It also includes progress on other processes and reforms, and how these have contributed to achievements of MKUKUTA outcomes.
The purpose of this report is to inform stakeholders on the progress in MKUKUTA implementation and associated processes, with a view to stimulate dialogue on key issues, and inform subsequent planning, budgeting and implementation.
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Growth and Reduction of Income Poverty
Various interventions were implemented during the period under review that has bearing to outcomes produced. These interventions include the ongoing reforms, sound monetary policy, National Debt Strategy, financial sector reforms and other interventions focusing on investment promotion, employment generation, export promotion, infrastructure and human resource development and the expansion of irrigation schemes and provision of agricultural credit and inputs to small holders.
These have yielded substantial progress. Growth performance is still on track although it slackened slightly to 6.2 percent in 2006, compared to 6.8 percent attained in 2005. The decline is mainly attributable to drought and energy crises. Agriculture, manufacturing, electricity and water sectors were the most hit by the crises. Total exports of goods and services grew to US$ 3,133.1 million in 2006 from US$ 2,945.5 million in 2005. The growth was mainly contributed by mineral and service exports (including earnings from tourism). Government domestic revenue collection as a percentage of GDPmp (tax and non tax revenue) increased to 15.6
percent in 2006/07 from 14.3 percent in 2005/06. Domestic credit to private sector has increased from 11.0 percent of GDPmp in 2005 to 12.5 percent in 2006.
Significant achievement has been recorded on the national debt in the recent years. The external debt stock in the year under review was estimated at US$5,749.0 or about 35percent of GDP compared to 50 percent of GDP as MKUKUTA requires. The total external debt is equivalent to 80.0 percent of the total national debt stock. Official foreign reserve has been equivalent of 5.3 moths of import as compared to 6 months of import in 2005. Three major reasons explain the decline: (i) increased import bills caused by increased petroleum prices, (ii) an increase in the importation of capital goods and (iii) increases in the importation of foodstuffs in response to the drought. The trend in export earnings as percentage of GDP is however on the increase despite marginal decrease from 22.2 percent in 2005/06 to 21.9 percent in 2006/07.
Manufacturing sector registered growth of 8.6 percent in 2006 compared to 9 percent in 2005. As noted earlier, the decline again is explained by power crisis which increased the cost of electricity as well as the increase in the price of industrial oil. Agricultural sector grew by 4.1 percent in 2006 due to drought. The crop sub-sector grew by 4.0 percent in 2006 compared to 5.2 percent in 2005. Livestock sub sector grew by 4.1 percent in 2006, against MKUKUTA targets of 9percent by 2010. Growth in the mining sector increased from 15.7 percent in 2005 to 16.4 percent in 2006. The contribution of the sector to GDP only increased from 3.5 percent in 2005 to 3.8 percent in 2006. The increase comes from both large and small scale miners.
Participation of the informal sector and SMEs (including cooperatives) in the mainstream economy indicates a substantial increase in the share of labor force employed in the informal sector – from 5.3 percent in 2000/01 to 9.3 percent in 2005/06. The government continues to promote the sector using various instruments such as informal sector exhibition for East African Countries, and demand driven skills programs.
There is some progress on the Council roads, whereby 13, 353km of roads were scheduled for rehabilitation. By April 2007, a total of 3,181km of council roads were rehabilitated. Notable progress has also been registered in the trunk and regional road sector, whereby the percentage of trunk and regional roads in good and fair conditions increased from 51 percent in 2000 to 78 percent by December 2006.
Food crop production reached 10.9 million tones in 2005/06. This resulted in food Self Sufficient Ratio (SSR) of 112 percent which is in line with MKUKUTA targets.
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