6 This is due to the fact that only a small fraction of the population lives in Dar.<sup>4</sup> Consequently, even the large drop in poverty in Dar made only a small dent in the national poverty rate, while the small drop in the rural poverty rate had a relatively large effect on the national poverty rate.

The decomposition also shows that just 11.6 percent of the decline in the headcount at the national level is attributable to the shift of the population from poorer rural areas to wealthier urban areas, chiefly Dar es Salaam. Most of this shift is probably due to migration. The small size of this “population-shift effect” demonstrates that rural-urban migration cannot substantially reduce poverty in Tanzania in the short run. Because the population is overwhelmingly rural, even the rapid shift of population to wealthier Dar, which saw its population grow at a 4.4 percent annual rate versus 2.9 percent for the country as a whole, did not substantially reduce the national poverty rate.

**Table 4: Sectoral Decomposition of the Change in Poverty**

|||**Contributi**<br>**in Nationa**<br>**R**|**on to Change**<br>**l Headcount**<br>**ate**|
|---|---|---|---|
||**Population**<br>**Share in**<br>**1991/92**|**Absolute**<br>**Change**|**Percentage**<br>**of Total**<br>**Change**|
|**Dar es Salaam**|5.35|-0.56|17.08|
|**Other Urban Areas**|12.6|-0.34|10.49|
|**Rural Areas**|82.06|-1.82|55.41|
|**Total Intra-sector Change**||-2.72|82.98|
|**Population-Shift Effect**||-0.38|11.60|
|**Interaction Effect**||-0.18|5.41|
|**Change in Poverty**||-3.28|100|

The sectoral decomposition was calculated using both the 1991/92 and 2000/01 HBS data. For this analysis, in order to ensure that the decomposition properly accounted for changes in population shares, the 2000/01 data was reweighted to reflect the regional population distribution reported in the 2002 national census. As a result, the decline in the headcount rate shown here, 3.28, is slightly greater than the decline of 3.0 shown in Table 1 (from 38.6 to 35.6), based on calculations using the original weights.

Altogether, 55 percent of poverty reduction nationally was attributable to poverty declines in rural areas, and 39 percent was due to population shifts and declines in urban areas, with the remainder accounted for by the interaction effect. What does this suggest about the potential sources of poverty reduction for Tanzania in the future? Because both urban poverty reduction and urban-rural migration were already rapid during the 1990s, it is very unlikely that either can be an _increased_ source of poverty reduction in the near future. This is especially the case because the headcount rate in Dar is now low enough, at 17.6%, that the potential for reducing it further is limited. Consequently, accelerating the rate of decline of poverty can only be accomplished by increasing poverty reduction in rural areas. While migration and urban growth can play secondary

> 4 Table 4 shows 5.35 of the population percent living in Dar. This figure is based on the weights in the 1991/92 HBS. Census data, which provides more definitive population information, show that the fraction living in Dar was 5.8 percent in 1988 and 7.4 percent in 2002.