first and second generation of poverty reduction strategies that have attempted to incorporate social, economic and political integration dimensions. 86. The realisation that policy reform processes initiated in the mid-1980s had no underlying long-term, nationallyowned development philosophy was the premise for the crafting of Vision 2025. The plan was for Tanzania to become a middle-income country with a high level of human development, free from abject poverty by 2025. Vision 2025 implementation is buttressed on good governance and economic competitiveness. Absence of inclusive growth and structural transformation 87. Economic reforms in Tanzania have paid off. Annual GDP growth averaged 6.4 per cent over the last five years, exceeding 7.0 per cent in 2002 and 2003. Estimates put Tanzania’s growth rate at 6.8 per cent in 2012 and 7.1 per cent in 2013. This strong growth performance reflects the fruits of responsible monetary and fiscal policy, concerted reforms, rapid export growth, and significant debt relief. 88. Ironically, in Tanzania, as in other African countries in recent years, economic growth did not translate into a significant improvement in people’s lives. This is the paradox of growth, which former President Nyerere talked about in the 1960s. Despite impressive growth, little was achieved in terms of substantial and sustained poverty reduction. The incidence of income poverty only declined marginally from 35.8 per cent in 2000/01 to 33.6 per cent in 2010. Income poverty (basic needs and food poverty) varied across geographical areas, and was skewed against the rural areas. Tanzania’s economy also remains donor-dependent while major sectors of the economy - agriculture and industry - have remained largely untransformed. 89. This underscores the view that socio-economic reforms do have important implications for societal transformation. However, these outcomes were not given due consideration in the reform processes in Tanzania. This Report observes that the patterns of thought prevailing in Tanzanian society were not sufficiently articulated to guide institutional change and socio-economic transformation in the country. In the absence of a well-articulated and universally understood guiding framework for national social transformation, it is not surprising that many Tanzanians feel left out, as expressed in various stakeholder meetings. This is a major challenge for Tanzania as it transits from a socialist to a market-driven economy. Admittedly, Tanzania’s desired socio-economic transformation was articulated in Tanzania Vision 2025. But, as this Report shows, more needs to be done to mobilise the people of Tanzania to achieve the shared goals clearly delineated in Vision 2025. 90. The key lesson that emerges from the above observations is that the Tanzania’s past holds important lessons for the present and the future. As the country consolidates its democratisation process and deepens the growth process, it is important for Tanzania to build on its legacy of equitable development and egalitarianism. This could prove critical to addressing the current problems of poverty, unemployment and inequality in the country. Box 2.4: Best practice: Political stability and peaceful transfer of political power The United Republic of Tanzania is a peaceful and stable country, which has successfully built a strong national unity and reduced significantly the impact of ethnic or regional divisions. The use of Kiswahili as a national language has largely contributed to this unity, which is Nyerere’s legacy. Following the reintroduction of plural politics in 1985, Tanzania has successfully held four Presidential and Parliamentary elections. Tanzania’s Constitution provides for two presidential term limits of five years each. At the end of their tenure, the Presidents have so far left office without attempting to extend their term limits, as has happened in some African countries. This practice has served to consolidate and deepen the democratization process in the country. However, it is important to note that the peaceful transfer of power in Tanzania has taken place within the ruling party. The challenge will come when it comes to handing over power from one political party to another 39