Driving Tanzania's Economic Renaissance: The Impact of Strategic Budget Investments on Growth, Investment, and Employment

The implementation of the 2024/2025 budget plan, with its focused investment in infrastructure, incentives for foreign and domestic investments, and strategic expenditure on development projects, is designed to drive economic growth, create jobs, and enhance investment in Tanzania. By improving the investment climate, increasing employment opportunities, and diversifying the economy, the budget plan aims to foster a sustainable and inclusive economic growth trajectory for the country.

Investment (Uwekezaji)

1. Foreign Direct Investment (FDI):
   • Capital Inflows: The Tanzania Investment Centre (TIC) registered investment projects with significant capital inflows, including 181 projects with a total capital of USD 535.90 million in a past period. The continued attraction of such investments is expected to contribute substantially to economic growth by introducing new technologies, creating jobs, and expanding industrial activities​​.
   • Special Economic Zones (SEZs): Expansion of SEZs such as the Buzwagi and Kilimanjaro Industrial Park aims to attract more investors. These zones provide incentives and infrastructure that make it easier for businesses to operate, which in turn stimulates economic activities and growth​​.
2. Public Investment Projects:
   • Development Expenditure: With a total development expenditure of TZS 9.44 trillion, the government is investing heavily in infrastructure projects such as roads, bridges, and energy. These investments improve the business environment, reduce operational costs, and attract both domestic and foreign investors​​.

Employment (Ajira)

1. Job Creation through Investments:
   • Employment from TIC Projects: Investment projects registered with the TIC have created numerous jobs. For instance, the average number of jobs created annually highlights the positive impact of these investments on employment. This not only reduces unemployment but also improves the standard of living for many Tanzanians​​.
   • Infrastructure Projects: The development expenditure on infrastructure projects is expected to generate employment opportunities both directly and indirectly. For example, construction projects require a large workforce, and improved infrastructure can lead to more business activities, which further creates jobs.
2. Public Sector Employment:
   • Recurrent Expenditure on Salaries: TZS 9.83 trillion allocated for salaries ensures that public sector employees are adequately compensated. This helps maintain a stable and motivated workforce that is essential for delivering public services and supporting economic activities​​.

Economic Growth (Uchumi)

Tanzania's 2024/2025 budget plan focuses on leveraging foreign and domestic investments, enhancing infrastructure, and boosting key sectors like agriculture and industry to foster sustainable and inclusive economic growth. The plan not only aims to increase GDP through efficient use of funds but also prioritizes job creation and economic diversification, thereby improving overall economic conditions and living standards in the country.

1. GDP Growth:
   • Increased Revenues: With total revenue collection targeted at TZS 28.12 trillion, the government has more resources to invest in critical sectors such as health, education, and infrastructure, which are vital for economic growth​​.
   • Efficient Use of Funds: By ensuring that development expenditures are efficiently used in high-impact projects, the government aims to achieve higher GDP growth rates. Improved infrastructure, for instance, enhances productivity and economic efficiency, leading to overall economic growth.
2. Diversification of the Economy:
   • Sectoral Investment Distribution: The distribution of investment projects across various sectors (e.g., agriculture, industry, services) helps diversify the economy. Diversification reduces dependence on a few sectors and mitigates economic risks, making the economy more resilient and robust​​.
   • Support for Key Sectors: Specific focus on boosting agriculture through modern techniques and supporting industrial growth via infrastructure improvements ensures that these key sectors contribute significantly to economic growth. For example, modernizing agriculture can increase productivity and exports, while industrial growth can create jobs and stimulate other economic activities​​.
3. Investment (Uwekezaji):
   • Foreign Direct Investment (FDI): Significant capital inflows from foreign investment projects, totaling USD 535.90 million, are expected to drive economic growth. These investments bring in new technologies, create jobs, and expand industrial activities.
   • Special Economic Zones (SEZs): Expansion of SEZs like Buzwagi and Kilimanjaro Industrial Park aims to attract more investors by offering incentives and necessary infrastructure, thereby stimulating economic activities.
4. Employment (Ajira):
   • Job Creation through Investments: Investment projects registered with the Tanzania Investment Centre have created numerous jobs, thereby reducing unemployment and improving the standard of living.
   • Infrastructure Projects: Heavy government investment in infrastructure such as roads, bridges, and energy projects not only improves the business environment and reduces operational costs but also generates employment directly through construction and indirectly through increased economic activities.
5. Economic Growth (Uchumi):
   • GDP Growth: The government's targeted revenue collection of TZS 28.12 trillion enables significant investment in critical sectors like health, education, and infrastructure, which are essential for sustained economic growth.
   • Diversification of the Economy: Investment distribution across agriculture, industry, and services sectors aims to diversify the economy, reducing dependency risks and enhancing resilience. Specific support for agriculture and industrial growth through infrastructure improvements is expected to boost productivity and stimulate economic activities.