## Fostering Human Capital in Tanzania’s Rapidly Growing Population (SIPEA2025099)

## Source details

**Canonical URL:** [Fostering Human Capital in Tanzania’s Rapidly Growing Population (SIPEA2025099)](https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025099.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/selected-issues-papers/2025/english/sipea2025099.pdf.md)
- [Structured JSON version](/-/media/files/publications/selected-issues-papers/2025/english/sipea2025099.pdf.json)

---

### Background
- Demographics and population projections:
  - Almost half of Tanzanians are under 18 years of age; population projected to double to more than 130 million by 2050.
  - Rapid population growth rate of 3 percent.
  - Fertility: women have an average of 4.8 children (compared with 2.6 in lower middle-income countries and 4.3 in Sub-Saharan Africa).
  - Tanzania is a pre-dividend country due to high fertility levels and youthful age structure.
- Child health and nutrition:
  - One-third of children under 5 years are stunted.
- Education capacity and outcomes:
  - Student-teacher ratios: pre-primary 163, primary 61, lower-secondary 27.
  - 2014 fee-free basic education program guaranteed free access up to lower-secondary, causing a large inflow of students.
  - Resource allocation did not keep pace: soaring student-teacher ratios, infrastructure gaps, scarcity of trained teachers and textbooks, and significant attrition within and between preprimary, primary, and secondary cycles (UNICEF, 2024).
- Health sector capacity:
  - Maternal and under-five mortality rates substantially reduced.
  - Health sector workforce has grown, with new recruits deployed predominantly to rural areas.
  - Gap in human resources of about 66 percent at the primary health care level; addressing it would require hiring some 200,000 health workers.
  - Significant shortages of health facilities, medical supplies, and laboratory equipment.
  - High fertility rates continue to put pressure on the healthcare system.
- Comparative standing:
  - Tanzania spends less than its EAC peers in health and education, resulting in fewer doctors, health workers, and hospital beds, lower enrollments, and a high student-teacher ratio in primary schools (Figure 1).

### Authorities’ Strategy and Reforms
- Fiscal prioritization:
  - Fiscal priority under the ECF program: protect and increase Priority Social Spending (PSS) to support development objectives.
  - PSS declined to 5.5 percent of GDP in FY20/21.
  - PSS rose to 6.7 percent of GDP in FY21/22 (RCF support) and was 6.7 percent of GDP in FY23/24.
  - Planned improvement to 7.1 percent of GDP by end FY24/25, aided by a supplementary budget increasing PSS by 0.2 percent of GDP.
  - Composition of recent PSS increases: Over the past three years, “Other” PSS increased by 0.8 pp of GDP, social protection by 0.3 pp, education by 0.1 pp, and no progress on health.
  - Much of the PSS increase was allocated to infrastructure spending on rural roads and electrification rather than traditional social spending (education, health, social protection).
- Education reforms:
  - Increasing mandatory education from 6 to 10 years: one year pre-primary, seven years primary, two years lower secondary.
  - Revising curriculum toward STEM, life skills, and vocational education; improving TVET.
  - Improving teacher training and continuous professional development.
- Health reforms:
  - Universal Health Insurance (UHI) Act passed in November 2023 establishing mandatory coverage and subsidized premiums for low-income citizens.
  - Health transformation focuses on universal health coverage, quality reproductive and maternal health services, and human resource development.
  - Initiative to train over a hundred thousand community health workers in priority regions.
- Development Vision 2050:
  - Aims to transform Tanzania by 2050 focusing on economic growth, human development, and social justice.
  - Places human capital at center: ambitious goals for education (early childhood, lifelong learning, workforce skills) and health (universal coverage, reduced mortality, improved quality, emphasis on prevention, maternal and child health, non-communicable diseases).

### Challenges Ahead
- Service and resource pressures:
  - Risk that demographic pressures outpace capacity to provide essential services and employment.
  - Need for enabling environment for private sector job creation (see chapter I).
- Specific constraints:
  - High fertility and youthful age structure limiting immediate demographic dividend prospects.
  - Continued shortages of trained teachers, textbooks, classrooms, health facilities, and medical supplies.
- To harness a demographic dividend:
  - Scale up affordable and high-quality family planning services.
  - Expand girls’ access to education (main socioeconomic determinant of fertility).
  - Promote women’s economic and social empowerment (Lee, 2023).

### Investing in Human Capital — Fiscal Needs and Benchmarks
- Overall additional spending requirements (IMF SDG Costing Tool; Piergiorgio et al, 2023):
  - Education: additional 4.2 percent of GDP by 2030 to reach top LIC performers and achieve an SDG4 index above 87; implies public education spending of about 7.5 percent of GDP in 2030.
  - Health: additional 2.1 percent of GDP over the next five years to reach top LIC performers and an SDG3 index of at least 75.
  - Total additional spending needed for education and health: 6.3 percent of GDP over the next five years.
  - The additional effort required is more than 2 percent of GDP above the average for other EAC member countries at a similar level of development.
- Education benchmarking assumptions:
  - Target of universal enrollment for primary and secondary levels and 50 percent for preprimary and tertiary education (akin to 2 years each of preprimary and tertiary and 12 years combined primary and secondary).
  - Reduce student-teacher ratio from 46 to 18.
  - Keep wage growth in sector below nominal GDP growth.
  - Private sector participation in education increases 14 pp to 46 percent.
- Health benchmarking assumptions:
  - 45-fold improvement in number of doctors to 2.3 doctors per 1,000 people.
  - 6-fold increase in other health workers to 6.4 per 1,000 population.
  - Reduce other recurrent and capital spending to accommodate more spending on doctors and other health workers and keep wage growth below nominal GDP growth.
  - Private sector expansion in health of 23 pp to 46 percent.
- Population scenarios and fiscal implications:
  - Under current high-fertility levels, school-age population projected to reach 65.5 million by 2061.
  - Under a low fertility scenario (2.5 children per woman), school-age population projected to be 44.3 million by 2061 (WB, 2024).
  - Slower population growth could reduce needed public education spending by 1.2 percent of GDP.
  - UNICEF (2023) estimates 285,250 children will enter the public education system each year, on average, over the next four decades under current rapid population growth.

### Demographic pressures and resource needs (Operational implications)
- Education system scale-up requirements to maintain 2021 student-teacher ratio and accommodate new students:
  - Hiring over 5,000 new teachers per year.
  - Building 4,500 classrooms per year.
- Under a slower population scenario:
  - The number of students would be reduced by almost a third.
  - The necessary resources (teachers, and classrooms) to maintain the status quo would be reduced by almost a third.
- Health sector implication:
  - To cover population growth of about 1.9 million individuals per year, considerable investments in the health sector will be needed just to maintain the present level of services.

### Spending Efficiency and Service Delivery
- Current efficiency and targeting issues:
  - Social spending often not targeted to areas or populations where it is needed most.
  - In education, mismatch between expansion of access and student learning outcomes due to teacher quality, school infrastructure and classroom resources.
  - In health, underinvestment in preventive health services and community health workers increases long-term burden on the healthcare system.
  - Limited service coverage in remote areas for medical specialties and specialized subjects such as science, math and English.
- Potential efficiency-enhancing measures highlighted:
  - More spending on preventive health services and community health workers.
  - Use of digital tools for telemedicine and education to reduce service coverage gaps in remote areas.
  - Better public financial management in both sectors, including improving budget planning, monitoring, and execution to ensure spending is more effective and leads to better health and education outcomes.

### World Bank Recommendations to Improve Spending Efficiency (Box 1)
- Education recommendations:
  - i) Steadily increase public spending over time, from its current level of about 3 percent of GDP to 4.2 percent.
  - ii) Reallocate spending in favor of basic education, improve management and oversight of service delivery to schools, and reduce subsidies for food and lodging in higher education and upper secondary education.
  - iii) Strengthen access to both schools and teachers by fostering smaller schools in rural areas and improving accessibility and teacher deployment to address severe imbalances across regions.
- Health recommendations:
  - Improve primary health care (PHC) service delivery to increase health system efficiency.
  - Ensure adequate financial resources for the sector to improve healthcare infrastructure, guarantee availability of medical supplies, and hire and retain skilled healthcare professionals, especially for PHC.
  - Improve direct allocation of funds to PHC facilities by using the District Health Financing Facility (DHFF) and Facility Financial Accounting and Reporting System (FAARS).
  - Leverage UHI to expand health insurance coverage nationwide, ensure PHC coverage for all Tanzanians, reduce out of pocket expenditures, and promote equitable access.
  - Allocate more resources to support enrolment and coverage of low-income households.
  - Invest in training and continuous professional development of health workers, including community health workers (CHWs).
  - Prioritize hiring more health workers to close the large gap, particularly at the PHC level, to ensure a PHC-driven service delivery and contain costs.
  - The government's plan to recruit and train 137,000 CHWs over the next 5 years is identified as a step toward addressing the human resource gap, but it should be supported by adequate budget allocations and timely execution to ensure adequate distribution and expansion of coverage to targeted areas.

### Policy Recommendations (Summary of specific actions)
- High-level objective:
  - Accelerate education and health improvements through more and better targeted investments to address Tanzania’s demographic challenges and achieve a demographic dividend.
- Specific policy actions:
  - i) Increase budgetary allocation for education and health in line with demographic needs and the goals under Vision 2050.
  - ii) Rebalance spending toward current spending to expand the education and health workforce, and adequately supply health and education facilities with required materials (textbooks, medicines, equipment, etc.).
  - iii) Enhance training for educators and health workers particularly in rural areas to address geographical imbalances.
  - iv) Make use of digital tools to enhance learning and healthcare service delivery.
  - v) Encourage private sector expansion into both sectors to alleviate pressures and support efficiency gains.
  - Improve accountability and transparency in public spending to ensure that resources are used effectively.

### Role of Official Development Assistance (ODA)
- Observations and recommended further work:
  - Official Development Assistance (ODA) is currently declining rapidly.
  - A comprehensive analysis of the role of foreign development assistance would be useful to:
    - fully understand the impact on all social sectors, particularly in health where most ODA has been targeted, both on and off budget;
    - identify opportunities for more efficient use of available resources;
    - motivate increased domestic resource mobilization; and
    - pool donor financing.

*Prepared by Sebastian Acevedo; IMF Selected Issues Paper SIP/2025/099, completed June 16, 2025.*

### Section 1

### Fostering Human Capital in Tanzania’s Rapidly Growing Population

### A. Background
- Almost half of Tanzanians are under 18 years of age; population projected to double to more than 130 million by 2050.
- One-third of children under 5 years are stunted.
- Student-teacher ratios: pre-primary 163, primary 61, lower-secondary 27.
- Education:
  - 2014 fee-free basic education program guaranteed free access up to lower-secondary, causing a large inflow of students.
  - Resource allocation did not keep pace: soaring student-teacher ratios, infrastructure gaps, scarcity of trained teachers and textbooks, and significant attrition within and between preprimary, primary, and secondary cycles (UNICEF, 2024).
- Health:
  - Maternal and under-five mortality rates substantially reduced.
  - Health sector workforce has grown, with new recruits deployed predominantly to rural areas.
  - Gap in human resources of about 66 percent at the primary health care level; addressing it would require hiring some 200,000 health workers.
  - Significant shortages of health facilities, medical supplies, and laboratory equipment.
  - High fertility rates continue to put pressure on the healthcare system.
- Comparative standing:
  - Tanzania spends less than its EAC peers in health and education, resulting in fewer doctors, health workers, and hospital beds, lower enrollments, and a high student-teacher ratio in primary schools (Figure 1).

### B. Authorities’ Strategy
- Fiscal priority under the ECF program: protect and increase Priority Social Spending (PSS) to support development objectives.
  - PSS declined to 5.5 percent of GDP in FY20/21.
  - PSS rose to 6.7 percent of GDP in FY21/22 (RCF support) and was 6.7 percent of GDP in FY23/24.
  - Planned improvement to 7.1 percent of GDP by end FY24/25, aided by a supplementary budget increasing PSS by 0.2 percent of GDP.
- Composition of recent PSS increases:
  - Over the past three years, “Other” PSS increased by 0.8 pp of GDP, social protection by 0.3 pp, education by 0.1 pp, and no progress on health.
  - Much of the PSS increase was allocated to infrastructure spending on rural roads and electrification rather than traditional social spending (education, health, social protection).
- Education reforms:
  - Increasing mandatory education from 6 to 10 years: one year pre-primary, seven years primary, two years lower secondary.
  - Revising curriculum toward STEM, life skills, and vocational education; improving TVET.
  - Improving teacher training and continuous professional development.
- Health reforms:
  - Universal Health Insurance (UHI) Act passed in November 2023 establishing mandatory coverage and subsidized premiums for low-income citizens.
  - Health transformation focuses on universal health coverage, quality reproductive and maternal health services, and human resource development.
  - Initiative to train over a hundred thousand community health workers in priority regions.
- Development Vision 2050:
  - Aims to transform Tanzania by 2050 focusing on economic growth, human development, and social justice.
  - Places human capital at center: ambitious goals for education (early childhood, lifelong learning, workforce skills) and health (universal coverage, reduced mortality, improved quality, emphasis on prevention, maternal and child health, non-communicable diseases).

### C. Challenges Ahead
- Demographic pressures:
  - Rapid population growth rate of 3 percent.
  - Fertility: women have an average of 4.8 children (compared with 2.6 in lower middle-income countries and 4.3 in Sub-Saharan Africa).
  - Tanzania is a pre-dividend country due to high fertility levels and youthful age structure.
- To harness a demographic dividend:
  - Scale up affordable and high-quality family planning services.
  - Expand girls’ access to education (main socioeconomic determinant of fertility).
  - Promote women’s economic and social empowerment (Lee, 2023).
- Risk that demographic pressures outpace capacity to provide essential services and employment.
- Need for enabling environment for private sector job creation (see chapter I).

### D. Investing in Human Capital
- Additional spending to reach SDGs by 2030 (IMF SDG Costing Tool; Piergiorgio et al, 2023):
  - Education: additional 4.2 percent of GDP by 2030 to reach top LIC performers and achieve an SDG4 index above 87; implies public education spending of about 7.5 percent of GDP in 2030.
  - Health: additional 2.1 percent of GDP over the next five years to reach top LIC performers and an SDG3 index of at least 75.
  - Total additional spending needed for education and health: 6.3 percent of GDP over the next five years.
  - The additional effort required is more than 2 percent of GDP above the average for other EAC member countries at a similar level of development.
- Benchmarking assumptions (education):
  - Target of universal enrollment for primary and secondary levels and 50 percent for preprimary and tertiary education (akin to 2 years each of preprimary and tertiary and 12 years combined primary and secondary).
  - Reduce student-teacher ratio from 46 to 18.
  - Keep wage growth in sector below nominal GDP growth.
  - Private sector participation in education increases 14 pp to 46 percent.
- Benchmarking assumptions (health):
  - 45-fold improvement in number of doctors to 2.3 doctors per 1,000 people.
  - 6-fold increase in other health workers to 6.4 per 1,000 population.
  - Reduce other recurrent and capital spending to accommodate more spending on doctors and other health workers and keep wage growth below nominal GDP growth.
  - Private sector expansion in health of 23 pp to 46 percent.
- Population scenarios and fiscal needs:
  - Under current high-fertility levels, school-age population projected to reach 65.5 million by 2061.
  - Under a low fertility scenario (2.5 children per woman), school-age population projected to be 44.3 million by 2061 (WB, 2024).
  - Slower population growth could reduce needed public education spending by 1.2 percent of GDP.
  - UNICEF (2023) estimates 285,250 children will enter the public education system each year, on average, over the next four decades under current rapid population growth.

### E. Policy Recommendations
- (No explicit policy recommendations text provided in the supplied section beyond the above-authorities’ strategies and reform priorities.)

*Prepared by Sebastian Acevedo; IMF Selected Issues Paper SIP/2025/099, completed June 16, 2025.*

### Section 2

### sipea2025099 - Section 2

### Demographic pressures and resource needs
- To maintain the 2021 student-teacher ratio and accommodate new students would require:
  - hiring over 5,000 new teachers per year; and
  - building 4,500 classrooms per year.
- Under a slower population scenario:
  - the number of students would be reduced by almost a third; and
  - the necessary resources (teachers, and classrooms) to maintain the status quo would be reduced by almost a third.
- Health sector implications:
  - To cover population growth of about 1.9 million individuals per year, considerable investments in the health sector will be needed just to maintain the present level of services.

### Spending efficiency and service delivery
- Improved spending efficiency can help achieve better outcomes; current issues include:
  - Social spending often not targeted to areas or populations where it is needed most.
  - In education, mismatch between expansion of access and student learning outcomes due to teacher quality, school infrastructure and classroom resources.
  - In health, underinvestment in preventive health services and community health workers increases long-term burden on the healthcare system.
  - Limited service coverage in remote areas for medical specialties and specialized subjects such as science, math and English.
- Potential efficiency-enhancing measures highlighted:
  - More spending on preventive health services and community health workers.
  - Use of digital tools for telemedicine and education to reduce service coverage gaps in remote areas.
  - Better public financial management in both sectors, including improving budget planning, monitoring, and execution to ensure spending is more effective and leads to better health and education outcomes.

### World Bank recommendations to improve spending efficiency (Box 1)
- Education recommendations:
  - i) Steadily increase public spending over time, from its current level of about 3 percent of GDP to 4.2 percent.
  - ii) Reallocate spending in favor of basic education, improve management and oversight of service delivery to schools, and reduce subsidies for food and lodging in higher education and upper secondary education.
  - iii) Strengthen access to both schools and teachers by fostering smaller schools in rural areas and improving accessibility and teacher deployment to address severe imbalances across regions.
- Health recommendations:
  - Improve primary health care (PHC) service delivery to increase health system efficiency.
  - Ensure adequate financial resources for the sector to improve healthcare infrastructure, guarantee availability of medical supplies, and hire and retain skilled healthcare professionals, especially for PHC.
  - Improve direct allocation of funds to PHC facilities by using the District Health Financing Facility (DHFF) and Facility Financial Accounting and Reporting System (FAARS).
  - Leverage UHI to expand health insurance coverage nationwide, ensure PHC coverage for all Tanzanians, reduce out of pocket expenditures, and promote equitable access.
  - Allocate more resources to support enrolment and coverage of low-income households.
  - Invest in training and continuous professional development of health workers, including community health workers (CHWs).
  - Prioritize hiring more health workers to close the large gap, particularly at the PHC level, to ensure a PHC-driven service delivery and contain costs.
  - The government's plan to recruit and train 137,000 CHWs over the next 5 years is identified as a step toward addressing the human resource gap, but it should be supported by adequate budget allocations and timely execution to ensure adequate distribution and expansion of coverage to targeted areas.

### Policy recommendations
- High-level objectives:
  - Accelerate education and health improvements through more and better targeted investments to address Tanzania’s demographic challenges and achieve a demographic dividend.
- Specific policy actions:
  - i) Increase budgetary allocation for education and health in line with demographic needs and the goals under Vision 2050.
  - ii) Rebalance spending toward current spending to expand the education and health workforce, and adequately supply health and education facilities with required materials (textbooks, medicines, equipment, etc.).
  - iii) Enhance training for educators and health workers particularly in rural areas to address geographical imbalances.
  - iv) Make use of digital tools to enhance learning and healthcare service delivery.
  - v) Encourage private sector expansion into both sectors to alleviate pressures and support efficiency gains.
  - Improve accountability and transparency in public spending to ensure that resources are used effectively.

### Role of Official Development Assistance (ODA)
- Rationale for further work:
  - Official Development Assistance (ODA) is currently declining rapidly.
  - A comprehensive analysis of the role of foreign development assistance would be useful to:
    - fully understand the impact on all social sectors, particularly in health where most ODA has been targeted, both on and off budget;
    - identify opportunities for more efficient use of available resources;
    - motivate increased domestic resource mobilization; and
    - pool donor financing.

*Source: sipea2025099 - Section 2.*

---


_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025099.pdf_