Poverty Dynamics and Its Drivers in Tanzania: A Lesson to Poverty Reduction Policies

Abstract

Poverty has been understood to be dynamic in nature. Some people remain in poverty for long periods, but there are others who periodically move in and out of poverty. Identification of driving factors that are highly related to poverty dynamics is a crucial aspect in formulating successful policies geared at ending poverty. Using a sample of 2177, 3148, and 3182 in 2008, 2010, and 2012, respectively from Tanzania's national panel survey, this study intends to assess the dynamic nature and drivers of poverty in Tanzania, bearing in mind that an effective poverty reduction process requires context-specific knowledge about poverty dynamics. The study adopted the Markov transition matrix equation to assess the nature of poverty dynamics and the Multinomial Logit Model to analyse the determinants of poverty dynamics. The results show that poverty is extremely dynamic in the context of Tanzania. Policy variables such as education, rural-urban settings, household head occupation, electricity connection, and ownership of assets were statistically significant determinants of poverty dynamics in Tanzania. The findings imply that social protection and promotion programmes are critical to ensure inclusiveness in the development process and promote pro-poor growth. Policy makers must also consider the varying nature of poverty and vulnerability in designing policies.