Better Roads, Better Off? Evidence on Upgrading Roads in Tanzania

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The rehabilitation of 2,500 km of major roads in Tanzania was evaluated for its impact on rural livelihoods, revealing that while transportation costs decreased, rural households faced adverse effects such as reduced agricultural income and increased competition [1][7][52]. Summary by Sections Introduction - Spatial isolation is a significant contributor to poverty, with 80% of the extreme poor living in rural areas. Only 34% of rural Sub-Saharan Africans live within 2 km of an all-season road, highlighting the need for infrastructure investment [2][6]. Context - Agriculture is the main livelihood for over two-thirds of Tanzanians, accounting for 70% of their income. The road upgrading program aimed to enhance rural economies and reduce poverty by improving access to markets [15][20]. Road Upgrading Program - The program focused on upgrading roads in poor condition, with 6,000 km planned for improvement. By the end of 2013, 2,564 km of roads were paved, significantly improving Tanzania's infrastructure ranking [23][25]. Data - The analysis utilized geolocated road data from TANROADS and household panel survey data from LSMS-ISA, covering 3,265 households across Tanzania [26][34]. Estimation Strategy - A difference-in-difference estimation approach was employed, controlling for household fixed effects and using propensity score matching to create comparable treatment and control groups [38][41]. Results - The findings indicated that rural households experienced a decrease in rice prices and agricultural income, while non-farm work increased. There was no significant evidence of migration due to the road upgrades [52][56].