a. Growth, Poverty and Inequality xcvii. This report notes that in recent years, Tanzania has made progress with macroeconomic stability and impressive economic growth. During the period under review, access to public services increased significantly and social indicators steadily improved, particularly in health and education. There have been also important investments in infrastructure, major institutional and legal reforms. However, latest survey findings on living conditions for the Tanzanian people suggest only marginal declines in aggregate poverty rates which remain high. xcviii. A recurring theme of this report is the high level of poverty in Tanzania. According to available household survey data, 37 per cent of Tanzanians are still poor, and the MDG analysis in Tanzania indicates that MDG1 on halving poverty will not be achieved by 2015. Job creation has remained below expectations. Poverty levels are particularly high in rural areas - where the majority of Tanzanians live - and among the youth. xcix. Related to the challenge of poverty in Tanzania is the issue of inequality: the gap between the rich and the poor. Inequality is a fundamental issue for human development. The Gini Index in Tanzania rose from 34.6 in 2000 to 37.6 in 2007 – a sign of growing income inequality. c. Extreme inequalities in life opportunities have a direct bearing on what people can be and what they can do – that is, on human capabilities. Inequality also matters because it violates the widely-held notion that all people, wherever they are, enjoy certain basic rights. Deep disparities based on wealth, region, gender, and ethnicity are bad for growth, bad for democracy, and bad for social cohesion. ci. The danger is that prevailing economic divisions in the URT may harden into permanent social divisions, setting in motion a self-perpetuating cycle of social disadvantages. The other concern is that rising inequities in resource distribution may erupt into social conflict. Moreover, inequalities in health, education and income impact on human development, deeply affecting social well-being. cii. The APR Panel cautions that unless economic growth in Tanzania is more inclusive and broadly shared, the significant achievements of the last decade will not translate into sustained poverty reduction and economic empowerment for a majority of the people. Tanzania must vigorously pursue an inclusive growth agenda to share the benefits of growth equitably among all the groups of people who make up the Tanzanian population. In this respect, more debate and research is needed on how to optimise the poverty-reducing potential of growth. b. Capacity Constraints and Implementation Challenges ciii. Capacity building with a view to developing not only a capable state, but also a capable nation and society, should be at the heart of development processes in Africa. The essence of capacity, and a capable state and society, is the ability to identify goals and objectives and marshal all national resources to achieve them. This capacity building, sustainable development and societal transformation nexus has been widely recognised, and is embodied in NEPAD. civ. As stated in the NEPAD Capacity Building Framework, due recognition must be given to the fact that capacity building is a goal not only for the state, but for the nation as a whole. Often, genuine, sound political and economic governance is negated by deficiencies in the capacities of other stakeholders, notably CSOs. These organisations fall short in their ability to act as effective advocates of the people and agents of development. Another area where these organisations often fall short is in their ability to address some of their challenges through their own efforts, rather than relying all, or most of the time, on Government or donors to solve these problems for them. cv. Tanzania has developed considerable capacity to prepare its own development plans. This capacity is reflected in the country’s plethora of national development policies and programmes. As noted in this report, Tanzania’s National Strategy for Growth and Reduction of Poverty (NSGRP), commonly known by its Kiswahili acronymMKUKUTA, and Zanzibar’s National Strategy for Growth (ZSGRP), popularly known as MKUZA, are key guiding frameworks for promoting national development. They build on Tanzania’s Development Vision 2025, with an increased focus on equitable growth and governance especially. The associated targets and poverty reduction outcomes are consistent with, and indeed in many cases, go beyond the Millennium Development Goals (MDGs). 14