Public Social Spending and Poverty in Tanzania: A Benefit Incidence Analysis

Abstract

Research on poverty in relation to public spending has never been as vigorous as it is now. Public spending has along-run effect in reducing the likelihood of being poor. This study estimated the benefit incidence analysis, progressivity of benefit and marginal benefit incidence of public spending on selected social utilities in Tanzania using the household budget surveys of 2000/01 and 2007. Benefit incidence and progressivity of benefit were estimated using the distributive analysis stata package procedure. The result of the analyses shows that public spending on social utilities in Tanzania is not pro-poor. The marginal benefit incidence analysis shows that the poorest quintile can only benefit more than the richest quintile from extra spending on the social utility in which the current accessibility is high. This is mostly the case of primary education as estimated in this study. Finally, from the findings of this study we recommend more efforts by the government to make public spending in Tanzania pro-poor to accelerate the speed at which the poor benefit more from increases in access to social utilities. One of the major ways in which the government can make public spending pro-poor is spending on the sectors that benefit more the poor people such as on social infrastructure (health and education), and on agriculture.

JEL Classification: D21

Keywords: social spending, poverty, benefit incidence analysis, Tanzania