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TICGL | Economic Consulting Group
Why Are Millions Still Unemployed Despite Tanzania's Rising GDP?
January 5, 2026  
Tanzania Economic Growth vs Job Creation: Why Millions Remain Unemployed Despite 6% GDP Growth | TICGL Why Are Millions Still Unemployed Despite Tanzania's Rising GDP? A Comprehensive Analysis of Tanzania's Economic Growth vs Job Creation Paradox (2018-2026) 6.0% GDP Growth Rate (2025) 900K+ New Job Seekers Annually 50-60K Formal Jobs Created Yearly 800K+ Annual Job […]
Tanzania Economic Growth vs Job Creation: Why Millions Remain Unemployed Despite 6% GDP Growth | TICGL

Why Are Millions Still Unemployed Despite Tanzania's Rising GDP?

A Comprehensive Analysis of Tanzania's Economic Growth vs Job Creation Paradox (2018-2026)

6.0%
GDP Growth Rate (2025)
900K+
New Job Seekers Annually
50-60K
Formal Jobs Created Yearly
800K+
Annual Job Gap

The Tanzania Employment Paradox

Over the past decade, Tanzania has consistently recorded strong economic growth, positioning itself among the fastest-growing economies in Sub-Saharan Africa. Between 2018 and 2025, the country's Gross Domestic Product (GDP) expanded at an average rate of around 5-7 percent, recovering steadily after the COVID-19 slowdown and reaching approximately 5.6 percent in 2024 with projections of 6.0 percent in 2025 and 6.3 percent in 2026.

However, despite this robust growth performance, Tanzania is creating far fewer jobs than the number of people entering the labour market each year. Recent data show that while 900,000 to 950,000 new job seekers—mostly youth—enter the labour force annually, the economy generates only about 600,000 to 700,000 jobs, the majority of which are informal and low-productivity.

Critical Employment Gap

The number of formal jobs created each year remains extremely low, at only 50,000-60,000, leaving an annual employment gap of 300,000-400,000 people, projected to widen further in 2026 if current trends persist.

Economic Growth vs Job Creation Trends (2018-2026)

YearGDP Growth RateJobs CreatedYouth UnemploymentAnnual Job SeekersJob Gap
20187.0%450,00013.5%800,000+350,000
20197.0%480,00013.8%800,000+320,000
20204.8%320,00014.2%800,000+480,000
20214.9%380,00014.5%800,000+420,000
20224.7%410,00014.0%800,000+390,000
20235.1%440,00013.7%800,000+360,000
20245.6%607,000+13.7-14.0%850,000+243,000-293,000
20256.0%650,000+13.5-13.8%900,000+250,000-350,000
2026 (Forecast)6.3%700,000+13.3-13.5%950,000+300,000-400,000

Sector Contribution: GDP vs Employment

The structure of Tanzania's growth largely explains the employment paradox. High-growth sectors are capital-intensive and technology-driven, contributing significantly to GDP but generating very few jobs.

SectorGDP ShareEmployment ShareFormal JobsProductivityJob Creation Potential
Agriculture25-26%65%15%LowLow (needs transformation; grew 3% in 2024-2025)
Mining & Quarrying5-10%1%45%Very HighVery Low (capital-intensive; 16.6% growth in 2024)
Manufacturing8-9%6-7%55%HighMedium (if expanded; stagnant share since mid-1990s)
Construction12-13%8%35%MediumMedium-High (8% growth in 2024, projected 10% in 2025-2026)
Services42-43%28-29%60%HighMedium (tourism and telecom drive; 3.8% ICT contribution in 2024)

Key Insight: The Mining Paradox

Mining recorded growth of over 16% in 2024, yet employs only about 1% of the workforce. Meanwhile, agriculture employs about 65% of the population but contributes only 25-26% of GDP and has grown at a modest 3%.

Labor Market Statistics (2025 with 2026 Forecast)

IndicatorValue (2025)Trend & 2026 Forecast
Working Age Population (15-64)38.5 millionGrowing 3% per year; projected 39.6 million in 2026
Total Labor Force34-36 millionRapidly increasing; 36-37 million forecast for 2026
Formal Employment4.0-4.1 million (11-12%)Slow growth; ~4.2 million projected in 2026
Informal Employment28-30 million (76-80%)Growing; expected to remain dominant at 78-82% in 2026
Unemployment Rate8.7-9.3%Stable but high; forecast 8.5% in 2026
Youth Unemployment13.5-14.0%Above average; slight decline to 13.3% forecast in 2026
Underemployment35-40%Very high; persistent in informal sectors
Annual New Job Seekers900,000+Increasing; 950,000+ forecast in 2026
Annual Formal Jobs Created50,000-60,000Insufficient; projected 60,000-70,000 in 2026 with reforms
Annual Job Gap800,000+Critical; widening to 850,000+ in 2026

Root Causes of the Jobs Crisis

ProblemWhat It MeansImpactSeverity
Capital-Intensive GrowthGrowth from sectors like mining (16.6% in 2024) and telecom using automationHigh GDP but few jobsCritical
Skills MismatchGraduates (700,000+ annually) lack employer-needed skillsEducated youth can't find workHigh
Informal Sector Trap76-80% in informal jobs (up from 71% in 2023) with low pay/no securityPoor quality jobs, no advancementHigh
Agricultural Underproductivity65% employed but only 25-26% GDP; slow 3% growth in 2024-2025Poverty trap, low incomesCritical
Weak IndustrializationManufacturing stagnant at 8-9% GDP/6-7% jobs despite 5-6% overall growthMissing mass jobs opportunityHigh
Youth Population Boom900,000+ youth enter market yearly (2025), rising to 950,000+ in 2026Growing crisisCritical

Employment Breakdown (2025)

Employment TypeNumber (2025)PercentageCharacteristics
Formal Private Sector2.8-2.9 million8%Stable, benefits, taxed
Public Sector1.2-1.3 million3-4%Government jobs
Informal Sector28-30 million76-80%No contracts, no benefits
Subsistence Agriculture22-24 million60-65%Farming for own consumption
Unemployed3-4 million8-9%Actively seeking work
Total Labor Force34-36 million100%-

Proposed Solutions with 2026 Impact Forecast

Industrialization

Action: Build factories, process raw materials locally (e.g., agro-processing)

Impact: Create 100,000s manufacturing jobs

Timeline: Medium-term (5-10 years)

Skills Training

Action: Reform vocational schools, match to jobs (e.g., tech/digital focus)

Impact: Better employment for graduates

Timeline: Short-term (2-5 years)

SME Support

Action: Easier loans, less red tape, training

Impact: Small business growth; 500,000+ jobs by 2026

Timeline: Short-term (2-5 years)

Agricultural Transformation

Action: Modern farming, processing, value addition

Impact: Higher incomes, rural jobs

Timeline: Medium-term (5-10 years)

Digital Economy

Action: Internet access, tech training, startups

Impact: New jobs; 215,000 tech roles by 2026

Timeline: Short-term (2-5 years)

Conclusion: The Path Forward

Tanzania's experience clearly demonstrates that economic growth alone is not sufficient to solve unemployment. While GDP has continued to expand at 5-6 percent annually and is projected to reach 6.3 percent in 2026, the structure of this growth has failed to generate enough productive and decent jobs for the rapidly growing labour force.

With 900,000-950,000 new job seekers entering the market each year and only 50,000-70,000 formal jobs being created, the country faces a persistent and widening employment gap that leaves millions unemployed, underemployed, or confined to low-productivity informal activities.

The dominance of capital-intensive sectors, a stagnant manufacturing base, low agricultural productivity, and a skills mismatch between education and labour market needs has weakened the link between growth and job creation. As a result, the benefits of rising GDP remain unevenly distributed, particularly for young people, who continue to experience disproportionately high unemployment despite being the main drivers of labour supply.

Critical Reforms Needed

Addressing this challenge requires a fundamental shift in Tanzania's development strategy—from growth that prioritizes output to growth that prioritizes employment, productivity, and inclusion. Expanding labour-intensive industries, transforming agriculture, strengthening SMEs, and aligning skills development with market demand are no longer optional but urgent necessities.

Without such reforms, Tanzania risks sustaining impressive macroeconomic growth figures while the employment crisis deepens, undermining social stability and long-term economic sustainability.

AB

Amran Bhuzohera

Chief Economist & Research Lead

Over 10 years of experience in economic analysis across East Africa and international organizations, providing a unique blend of local insight and global economic perspective.

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