Remittance flows play a pivotal role in Tanzania's economic landscape, contributing $757 million in inward remittances in 2024, equivalent to 1.0% of GDP. While the country lags behind regional peers such as Kenya and Uganda, these private transfers offer a stable source of foreign exchange and household income. With modest outward remittances of $161 million, Tanzania remains a net recipient, highlighting opportunities to strengthen diaspora engagement and leverage remittances for sustainable development. This comparative regional analysis underscores the untapped potential to enhance financial inclusion, promote labor mobility, and foster economic resilience.

Inward Remittance Flows:

• 2024 Estimated Inflows: Tanzania received approximately $757 million, contributing to 1.0% of GDP.
• Comparative Position in East Africa:
  • Kenya received $4,800 million (4.6% of GDP).
  • Uganda received $1,492 million (2.6% of GDP).
  • Rwanda received $537 million (3.9% of GDP).
  • Burundi received $49 million (1.6% of GDP).

Tanzania ranks lower in absolute remittance inflows compared to Kenya and Uganda but surpasses Rwanda and Burundi. The proportion of remittances relative to GDP (1.0%) suggests moderate reliance compared to Kenya (4.6%) or Uganda (2.6%)​.

Outward Remittance Flows:

• 2023 Outflows: Tanzania recorded remittance outflows of $161 million, equating to 0.2% of GDP.
• Comparative Position in East Africa:
  • Kenya had outflows of $40 million (minimal, 0.0% of GDP).
  • Uganda had outflows of $218 million (0.4% of GDP).
  • Rwanda had outflows of $94 million (0.7% of GDP).
  • Burundi had outflows of $16 million (0.4% of GDP).

Tanzania's outward remittances are moderate among East African peers, with higher outflows than Kenya but lower than Uganda​.

Insights and Context:

1. Inward Remittances:
   • Key Source of Foreign Exchange: Moderate contribution to Tanzania's economy, reflecting a growing diaspora engagement but trailing behind Kenya and Uganda.
   • Potential for Growth: With improved diaspora engagement strategies and reduced transaction costs, Tanzania can enhance remittance inflows.
2. Outward Remittances:
   • Reflecting Increased Labor Movements: Outflows signify Tanzanian expatriates and foreign nationals sending funds abroad.
   • Balance with Inflows: The country maintains a favorable net remittance position, with inflows significantly higher than outflows.

Tanzania’s strategic focus could involve:

• Strengthening financial inclusivity to capture more remittances.
• Enhancing bilateral agreements to facilitate smoother remittance channels.
• Promoting investment opportunities for the diaspora to convert remittances into economic growth.

Key Implications of Remittance Flows

1. Diaspora Contributions

• Inward Remittances: At $757 million (1.0% of GDP) in 2024, remittances highlight the economic contributions of Tanzanians abroad. Although the volume is lower than peers like Kenya and Uganda, it still represents a stable source of foreign exchange and household income for recipients.
• Opportunity: With better diaspora engagement and reduced costs of money transfers, Tanzania can harness this resource to boost economic resilience and poverty reduction.

2. Limited Reliance Compared to Neighbors

• Kenya (4.6% of GDP) and Uganda (2.6% of GDP) are far more dependent on remittances relative to GDP. Tanzania's lower percentage suggests:
  • A less mature remittance market, with scope for growth.
  • Economic diversification, reducing dependence on external flows compared to peers.

3. Outward Remittances: Evidence of Regional Integration

• Tanzania's $161 million outflows (0.2% of GDP) reflect:
  • Cross-border labor movements, with Tanzanian expatriates working in other countries.
  • Presence of foreign nationals in Tanzania who remit earnings home.

This indicates regional and global labor market integration, although the scale of outflows remains modest compared to inflows.

4. Economic Development Indicator

• Inward Focus: A growing remittance inflow indicates increasing engagement with the diaspora and improvements in financial systems to capture these flows.
• Outward Focus: Moderate outward flows suggest that Tanzania is a net recipient of remittances, which is typical for developing economies. However, outflows may grow with increased labor migration and regional trade integration.

Regional Position

• Kenya dominates East Africa in remittance inflows due to a well-established and globally dispersed diaspora, along with efficient remittance channels.
• Tanzania's Moderate Rank: It holds a middle position in the region, above smaller economies like Burundi and Rwanda but behind Kenya and Uganda. This reflects the potential for Tanzania to grow its influence in regional labor markets and attract more remittances.

Policy and Strategy Implications

1. Financial Inclusion & Infrastructure:
   • Encourage the use of formal remittance channels by improving accessibility to banking and mobile money services.
   • Negotiate lower transaction costs with international financial institutions.
2. Diaspora Engagement:
   • Launch programs to strengthen connections with Tanzanians abroad, encouraging investments and remittances.
3. Domestic Investment Opportunities:
   • Offer attractive incentives for the diaspora to invest in productive sectors such as real estate, agriculture, and technology.
4. Labor Export Programs:
   • Promote skilled labor migration through agreements with countries seeking workers, particularly in sectors like healthcare, education, and construction.

What It Tells About Tanzania's Future

The remittance data suggests Tanzania has untapped potential to:

• Leverage its diaspora for economic development.
• Enhance its role in regional labor markets.
• Develop policies that reduce reliance on external aid by maximizing stable, private flows like remittances.