A Comprehensive Data-Driven Analysis of Debt Growth and Non-Inclusive Economic Growth
Over the past decade, Tanzania has increasingly relied on public borrowing as a central instrument for financing development, particularly large-scale infrastructure, energy projects, and budget support. As of December 2025, Tanzania's total national debt stock reached TZS 134.9 trillion (USD 50.8 billion), equivalent to an estimated 40–52 percent of GDP, depending on valuation methods and exchange rate assumptions.
This represents a 25.3 percent increase in just seven months (May–December 2025), far outpacing the country's real GDP growth of 6.4 percent in Q3 2025.
At first glance, this debt trajectory appears defensible. Tanzania remains below the commonly cited 55–60 percent debt-to-GDP distress threshold for developing economies, and headline macroeconomic indicators—such as strong GDP growth, moderate inflation of 3.3 percent, and foreign exchange reserves covering 4.9 months of imports—suggest short-term stability. These indicators support the official narrative that debt is being used productively to finance development and sustain economic momentum.
However, a deeper examination of the structure, composition, and servicing burden of Tanzania's debt raises critical concerns about whether current borrowing is genuinely financing inclusive development or merely postponing a deeper fiscal and social crisis.
First Critical Concern: Tanzania's debt is heavily skewed toward external borrowing, which accounts for 69.5 percent (TZS 93.7 trillion) of total public debt. Of this external debt, 66 percent is denominated in US dollars, exposing public finances to significant exchange rate risk. A 10 percent depreciation of the Tanzanian shilling would increase debt servicing costs by an estimated TZS 4.9 trillion, placing immediate pressure on the national budget without generating any new economic output.
Second Critical Concern: The debt servicing burden is rising rapidly, consuming an ever-growing share of government revenue. In 2025, Tanzania spent approximately TZS 11.5 trillion annually on debt service, equivalent to 20–25 percent of total government revenue. Projections indicate this figure could rise to 26–30 percent by 2028 under the current trajectory.
Third Critical Concern: Despite sustained borrowing and infrastructure expansion, economic growth has not translated into broad-based welfare improvements. While Tanzania's economy grew at an average rate of 5.3 percent between 2021 and 2025, nearly 49 percent of the population still lives below USD 3 per day, and 40 percent remain in extreme poverty under the USD 2.15 (PPP) threshold. Real wages have remained largely stagnant between 2020 and 2025, even as nominal GDP expanded by over 37 percent during the same period.
Fourth Critical Concern: Tanzania's revenue mobilization capacity remains structurally weak, with tax revenue standing at just 13.1 percent of GDP, one of the lowest ratios in the East African region. This means that even moderate increases in debt servicing translate into severe fiscal stress. In effect, Tanzania is borrowing faster than it can generate the domestic resources required to sustainably service that debt.
The central dilemma, therefore, is not whether debt can support development—it can and often does—but whether Tanzania's current debt path is aligned with structural transformation and inclusive growth. The data indicate that debt is rising 18 percent faster than GDP, poverty reduction is minimal, and fiscal space is shrinking. Without significant reforms in revenue mobilization, economic diversification, and employment creation, today's manageable debt levels risk becoming tomorrow's binding constraint on development.
In this context, Tanzania's rising national debt appears to be financing short-term growth and stability, but delaying the resolution of deeper structural weaknesses. The question is no longer whether the country can afford to borrow today, but whether it can afford not to fundamentally reform how borrowed resources are translated into productivity, jobs, and shared prosperity.
Tanzania's national debt has grown substantially to TZS 134.9 trillion (USD 50.8 billion) as of December 2025, representing approximately 40-52% of GDP. While the economy demonstrates robust GDP growth of 6.4% (Q3 2025), this expansion has not been inclusive, with 49% of the population living below $3/day and 65% of workers employed in agriculture experiencing only 3% sector growth.
This research examines the short-term (1-3 years) and long-term (5-10 years) impacts of rising debt in an economy where growth benefits accrue disproportionately to capital-intensive sectors and wealthy elites, leaving the majority of Tanzanians behind.
| Impact Category | Short-Term (1-3 Years) | Long-Term (5-10 Years) |
|---|---|---|
| Debt Sustainability | Moderate risk, manageable | High risk if structural issues unaddressed |
| Fiscal Space | Constrained (20-25% revenue to debt service) | Severely limited without revenue reforms |
| Poverty Reduction | Minimal impact | Deepening inequality likely |
| Economic Growth | 5.5-6.4% GDP growth maintained | Growth decelerates without transformation |
| Currency Risk | Moderate (69.5% external debt, 66% USD) | High vulnerability to exchange rate shocks |
| Debt Component | Amount (TZS Trillion) | Amount (USD Billion) | Share (%) | Year-on-Year Change |
|---|---|---|---|---|
| Total National Debt | 134.9 | 50.8 | 100.0 | +25.3% (from May 2025) |
| External Debt | 93.7 | 35.3 | 69.5 | +28.5% (from May 2025) |
| Domestic Debt | 37.9 | 14.3 | 30.5 | -1.2% (from Nov 2025) |
| Year | Total Debt (USD Billion) | External Debt (USD Billion) | Debt-to-GDP Ratio (%) | Trend |
|---|---|---|---|---|
| 2022 | N/A | 30.38 | 44.85 | Baseline |
| 2023 | N/A | 34.60 | 47.4-47.8 | Rising |
| 2024 | N/A | N/A | 48.2-49.8 | Accelerating |
| 2025 (Dec) | 50.8 | 35.3 | 40-52 | Wide range indicates measurement variations |
| 2026 (Proj.) | N/A | N/A | 47.0 | Stabilization expected if reforms implemented |
| 2022-2025 Change | +67.2% | +16.2% | +5.15 to +7.15 pp | Debt growing faster than GDP |
Key Insight: Debt has grown by 25.3% in just 7 months (May-December 2025), significantly faster than GDP growth of 6.4%, indicating rising debt-to-GDP ratio. External debt alone increased from USD 30.38 billion (2022) to USD 35.3 billion (2025), a 16.2% increase.
| External Debt Category | Amount (USD Billion) | Share of External Debt (%) | Key Characteristics |
|---|---|---|---|
| Total External Debt | 35.3 | 100.0 | 69.5% of total national debt |
| Multilateral Institutions | 19.3 | 58.7 | World Bank, IMF, AfDB (concessional terms) |
| Commercial Lenders | 11.5 | 34.8 | Higher interest rates, shorter maturity |
| Bilateral Lenders | 1.5 | 4.6 | China, other bilateral partners |
| Export Credit | 0.6 | 2.0 | Trade finance |
| Borrower Category | Amount (USD Billion) | Share of External Debt (%) |
|---|---|---|
| Central Government | 28.1 | 82.8 |
| Private Sector | 8.5 | 23.8 |
| Public Corporations | 0.004 | 0.0 |
| Currency | Amount (USD Billion) | Share of External Debt (%) |
|---|---|---|
| US Dollar (USD) | 23.3 | 66.0 |
| Euro (EUR) | 6.2 | 17.7 |
| Chinese Yuan (CNY) | 2.2 | 6.3 |
| Other Currencies | 3.6 | 10.0 |
Critical Risk: 66% USD-denomination creates severe currency vulnerability. A 10% TZS depreciation increases debt servicing by approximately TZS 4.92 trillion.
| Domestic Debt Category | Amount (TZS Trillion) | Share (%) | Characteristics |
|---|---|---|---|
| Total Domestic Debt | 37.9 | 100.0 | 100% TZS-denominated (no FX risk) |
| Treasury Bonds | 30.9 | 81.6 | Long-term (2-25 years) |
| Treasury Bills | 2.0 | 5.7 | Short-term (35-364 days) |
| Non-Securitized Debt | 5.0 | 14.2 | Overdrafts, contingent liabilities |
| Government Stocks | 0.15 | 0.4 | Minimal |
| Holder Category | Amount (TZS Trillion) | Share (%) |
|---|---|---|
| Commercial Banks | 10.9 | 28.8 |
| Pension Funds | 10.0 | 26.4 |
| Bank of Tanzania | 7.3 | 19.2 |
| Other Creditors | 6.9 | 18.3 |
| Insurance Companies | 1.9 | 5.1 |
| Debt Service Component | Monthly (Dec 2025) | Annual Estimate (2025) | % of Revenue | Assessment |
|---|---|---|---|---|
| External Debt Service | TZS 468.6B (USD 183.5M) | TZS 5,623B (USD 2,202M) | ~10-12% | Moderate burden |
| Principal Repayment | USD 136.8M | USD 1,642M | — | Principal-heavy structure |
| Interest Payment | USD 46.7M | USD 560M | — | Favorable concessional terms |
| Domestic Debt Service | TZS 488.0B | TZS 5,856B | ~10-13% | Manageable with reserves |
| Total Debt Service | TZS 956.6B | TZS 11,479B | 20-25% | Significant fiscal burden |
| Comparison Metrics | ||||
| Monthly Government Revenue (avg) | ~TZS 3,800B | TZS 45,600B | — | Based on FY 2025/26 projections |
| Debt Service to Revenue Ratio | — | 25.2% | — | High but sustainable short-term |
| FX Reserves Coverage | 4.9 months of imports (USD 6,329M) | — | Adequate buffer | |
Critical Finding: Debt service consumes 20-25% of government revenue, leaving limited fiscal space for social services, infrastructure, and poverty reduction programs essential for inclusive growth.
| Year | Total Debt Service (TZS Trillion) | As % of Revenue | As % of GDP | Growth Rate |
|---|---|---|---|---|
| 2020 | 7.2 | 18-20% | 2.5% | — |
| 2021 | 8.1 | 19-21% | 2.6% | +12.5% |
| 2022 | 9.3 | 20-22% | 2.7% | +14.8% |
| 2023 | 10.1 | 21-23% | 2.89% | +8.6% |
| 2024 | 10.8 | 22-24% | 2.9% | +6.9% |
| 2025 | 11.5 | 23-25% | 3.0% | +6.5% |
| 2026 (projected) | 12.5 | 24-26% | 3.1% | +8.7% |
Trend Analysis: Debt servicing is growing faster than revenue mobilization (13.1% of GDP), creating a widening fiscal gap that threatens long-term sustainability.
| Year | GDP Growth Rate (%) | GDP Nominal (USD Billion) | GDP Per Capita (USD) | Real Per Capita Growth (%) | Key Drivers |
|---|---|---|---|---|---|
| 2020 | 2.0% | 64.0 | ~1,050 | Negative | Pandemic impact, global recession |
| 2021 | 4.3% | 70.9 | ~1,129 | ~1.3% | Recovery begins, agriculture |
| 2022 | 4.7% | 76.2 | ~1,178 | ~1.7% | Mining expansion, construction |
| 2023 | 5.3% | 82.6 | ~1,240 | ~2.3% | Services, financial sector |
| 2024 | 5.5% | 88.0 | 1,302 | 2.5% | Broad-based growth |
| 2025 (Q3) | 6.4% | 95.2 (est.) | ~1,342 | ~3.4% | Agriculture, mining, construction |
| 2026 (Proj.) | 6.3% | 101.2 | ~1,379 | ~3.3% | Continued momentum if reforms |
| 5-Year Avg (2021-2025) | 5.3% | — | — | 2.3% | Strong but not inclusive |
| Year | GDP Nominal (USD Billion) | Total Debt (USD Billion) | Debt-to-GDP Ratio (%) | Population (Million) | GDP Per Capita (USD) |
|---|---|---|---|---|---|
| 2020 | 64.0 | 30.5 | 47.7% | 61.0 | 1,049 |
| 2021 | 70.9 | 33.2 | 46.8% | 62.8 | 1,129 |
| 2022 | 76.2 | 35.8 | 44.85% | 64.7 | 1,178 |
| 2023 | 82.6 | 38.9 | 47.4-47.8% | 66.6 | 1,240 |
| 2024 | 88.0 | 43.3 | 48.2-49.8% | 68.6 | 1,283 |
| 2025 | 95.2 | 50.8 | 40-52% | 70.9 | 1,342 |
| 2026 (proj.) | 101.2 | 55.0 | 47.0% | 73.4 | 1,379 |
| 5-Year Change (2020-2025) | +48.8% | +66.6% | +5.7 pp | +16.2% | +27.9% |
Critical Insight: Debt is growing 18% faster than GDP (66.6% vs 48.8% over 5 years), pushing the debt-to-GDP ratio from 47.7% to 53.4%, approaching the 55-60% distress threshold for developing economies.
| Sector | GDP Contribution (%) | Employment Share (%) | Growth Rate (Q3 2024) | Inclusivity Index | Impact on Majority |
|---|---|---|---|---|---|
| Agriculture | 26-30% | 65.0% | 3.0% | Very Low | Majority employed, slowest growth |
| Manufacturing | 8-9% | 6.8% | Stagnant | Very Low | No expansion for 30 years |
| Mining & Quarrying | 5-9.8% | ~1.0% | 16.6% | Very Low | Capital-intensive, few jobs |
| Electricity Generation | Minor | <1.0% | 19.0% | Very Low | Negligible employment |
| Financial Services | Part of 38-40% | 3-5% | 15.4% | Low | Urban-focused, skilled only |
| Construction | 13.2% | ~8% | 6-8% | Moderate | Some job creation |
| Services (other) | 38-40% | 29.0% | 4-6% | Moderate | Mostly informal |
Key Finding: The 65% of workers in agriculture experience only 3% sector growth, while capital-intensive sectors (mining 16.6%, electricity 19%) growing rapidly employ less than 2% of workforce. This structural mismatch is the primary driver of non-inclusive growth.
| Poverty Indicator | Rate (%) | Number of People (Million) | Year/Period | Trend/Projection |
|---|---|---|---|---|
| National Poverty Line | ||||
| National Poverty Line | 26-27% | ~18-19 million | 2024 | Only -1.8 pp decline since 2011/12 |
| National Poverty (Baseline) | 26.4% | ~17.6 million | 2017/18 | Reference point |
| International Poverty Lines | ||||
| Extreme Poverty ($2.15/day, 2021 PPP) | 40% | ~26.8 million | 2023 | Projected to 12% by 2043 (reform scenario) |
| Lower-Middle Income ($3.65/day) | 71% | ~47.6 million | 2023 | Projected to 37% by 2043 (reform scenario) |
| Upper-Middle Income ($3/day, old PPP) | 49.0% | ~33 million | 2024 | Minimal decline from 49.7% (2023) |
| Lower-Middle Income ($4.20/day) | 68.5% | ~46 million | 2024 | Most Tanzanians remain poor |
| Multidimensional Poverty Index | 59.2% | ~39.6 million | 2018 | Captures non-income deprivations |
Key Insight: Different poverty measures show 40-71% of Tanzanians are poor depending on threshold used. Even the most optimistic measure (national poverty at 26-27%) shows 18-19 million people living below the poverty line despite 13 years of 5-6% GDP growth.
| Income & Inequality Indicator | Value (2023-2025) | Comparison | Implication |
|---|---|---|---|
| Income Distribution | |||
| Top 1% income share | 17.9% | More than bottom 50% | Extreme concentration |
| Bottom 50% income share | 14.1% | Less than top 1% | Majority excluded |
| Top 10% income share | 35-40% (est.) | — | Elite capture of growth |
| Gini Coefficient (2018) | 40.5 | Moderate-high inequality | Worsening trend likely |
| Real Wage Stagnation | |||
| Urban mean wage growth (2020-2025) | 5.3% nominal | ~0% real (after inflation) | Workers don't benefit from GDP growth |
| Rural mean wage growth (2020-2025) | 4.9% nominal | ~0% real (after inflation) | Agricultural workers excluded |
| Minimum wage (public, July 2025) | TZS 500,000 | +35% from TZS 370,000 | Recent adjustment, but inadequate |
Critical Finding: Despite 37.5% nominal GDP growth (2020-2025), real wages grew 0%. The economy is expanding, but workers aren't capturing gains—profits flow to capital owners, not labor.
| Income Group | Food Expenditure Share | Effective Inflation Rate (2025) | Real Income Impact | Vulnerability |
|---|---|---|---|---|
| Bottom 50% (Poor) | 60-80% | 5.5-6.5% | Severe purchasing power erosion | Very High |
| Middle 30% | 40-50% | 4.0-4.5% | Moderate erosion | Moderate |
| Top 20% (Wealthy) | 20-30% | 3.0-3.5% | Minimal impact, asset appreciation | Low |
| Official Headline Inflation | — | 3.3% | Masks disparity | — |
| Food Inflation | — | 6.0-7.7% | Twice headline rate | — |
Key Insight: Poor households experience inflation 2x higher than official rates (5.5-6.5% vs 3.3%) because food constitutes 60-80% of their spending, while food inflation runs at 6-7.7%. This hidden inflation trap deepens poverty even as official statistics suggest stability.
| Employment Category | Share of Workforce (%) | Characteristics | Income Level | Job Security |
|---|---|---|---|---|
| Informal Employment | 76-80% | No contracts, no benefits, vulnerable | Low, unstable | None |
| Formal Private Sector | 10-12% | Contracts, some benefits | Moderate | Moderate |
| Public Sector | 8-10% | Stable, benefits, pensions | Moderate-High | High |
| Agriculture (mostly informal) | 65% | Subsistence, weather-dependent | Very Low | None |
| Youth Unemployment/Underemployment | >10% | Skills mismatch | — | — |
| Unemployment Rate (2023) | 8.9% | Official rate | — | — |
Critical Finding: 4 out of 5 workers are in informal jobs with low pay and no security. GDP growth creates formal sector opportunities for only a small minority, while the majority remain trapped in vulnerable, low-productivity work.
| Short-Term Impact Area | Current State (2025-2026) | Short-Term Trajectory (2026-2028) | Risk Level | Mitigation Required |
|---|---|---|---|---|
| Debt Service Burden | 20-25% of revenue | Rising to 26-30% of revenue | HIGH | Revenue mobilization critical |
| Social Spending | Health: 3-4% GDP Education: 3.5% GDP | Pressure to reduce or stagnate | HIGH | Protect priority spending |
| Infrastructure Investment | TZS 14.95 trillion (FY 2025/26) | Limited expansion capacity | MODERATE | Prioritize high-return projects |
| Domestic Arrears | Clearance ongoing | Risk of accumulation | MODERATE | Enforce commitment controls |
| Revenue Mobilization | 13.1% of GDP | Target 15-16% of GDP | CRITICAL | Implement MTRS aggressively |
| Fiscal Deficit | 3.0% of GDP (2025/26) | Maintain at 3.0% (EAC benchmark) | MODERATE | Fiscal discipline in election year |
| Fiscal Indicator | 2026 | 2027 | 2028 | Trend |
|---|---|---|---|---|
| Revenue (% of GDP) | 13.5% | 14.2% | 15.0% | Gradual improvement with reforms |
| Expenditure (% of GDP) | 16.5% | 17.0% | 17.5% | Rising pressure |
| Fiscal Deficit (% of GDP) | 3.0% | 2.8% | 2.5% | Consolidation if disciplined |
| Debt Service (% of Revenue) | 26% | 28% | 29% | Crowding out other spending |
| Social Spending (% of GDP) | 7.0% | 7.2% | 7.5% | Marginal increase if protected |
| Inclusion Indicator | 2025 Baseline | 2026 Projection | 2027 Projection | 2028 Projection | Assessment |
|---|---|---|---|---|---|
| Poverty Rate ($3/day) | 49.0% | 48.5% | 48.0% | 47.5% | Minimal improvement (0.5 pp/year) |
| Real Wage Growth | 0% (2020-2025) | 0.5% | 1.0% | 1.2% | Marginal gains |
| Informal Employment | 76-80% | 76% | 75% | 74% | Structural trap persists |
| Agricultural Productivity | 3% growth | 3.5% | 4.0% | 4.5% | Slow improvement without major investment |
| Income Inequality (Gini) | 40.5 (2018) | 41.0 (est.) | 41.5 (est.) | 42.0 (est.) | Worsening inequality |
Short-Term Poverty Impact:
| External Risk Factor | Current Exposure | Short-Term Risk (2026-2028) | Impact if Realized | Probability |
|---|---|---|---|---|
| USD Depreciation of TZS | 66% of external debt in USD | 5-10% cumulative depreciation | +TZS 4.7-9.4 trillion debt service cost | MODERATE-HIGH |
| Global Interest Rate Increase | 34.8% commercial debt | 100-200 basis points rise | +USD 200-400 million annual service | MODERATE |
| Export Commodity Shock | Gold 30% of exports, tourism 20% | Price decline or demand drop | Reduced FX earnings, reserves pressure | LOW-MODERATE |
| Foreign Aid Reduction | EU, other donors | 10-15% decline | Fiscal gap of TZS 1-2 trillion | MODERATE |
| FX Reserve Adequacy | 4.9 months of imports | Decline to 4.0-4.5 months | Reduced buffer against shocks | LOW-MODERATE |
Short-Term External Shock Scenario:
| Debt Sustainability Scenario | Optimistic (Reforms Succeed) | Baseline (Current Trajectory) | Pessimistic (Structural Failure) |
|---|---|---|---|
| 2030 Debt-to-GDP Ratio | 45% | 58% | 68% |
| 2035 Debt-to-GDP Ratio | 38% | 65% | 78% |
| Debt Service (% Revenue) | 22-25% | 32-38% | 45-55% |
| External Debt Distress Risk | Low | High | Very High |
| Fiscal Space for Development | Adequate | Severely constrained | Minimal |
| GDP Growth Rate | 6.5-7.0% | 4.5-5.5% | 3.0-4.0% |
| Poverty Rate ($3/day) | 35-38% | 44-46% | 50-55% |
| Long-Term Indicator | 2043 Projection | Current Baseline (2023-2025) | Change | Assumptions |
|---|---|---|---|---|
| GDP Per Capita (PPP) | +USD 1,059 increase | Current path | +26-28% | Combined reforms implemented |
| Extreme Poverty ($2.15/day) | 12% (~13.2 million people) | 40% (2023) | -28 percentage points | Strong inclusive growth |
| Poverty ($3.65/day) | 37% | 71% (2023) | -34 percentage points | Manufacturing expansion |
| Debt-to-GDP Ratio | Declining to 45% by 2027 | 40-52% (2025) | Stabilization | Export growth 10-12% annually |
| Climate Shock Impact on Debt | +6% to PPG external debt | — | One-off increase | Natural disaster scenario (4% GDP decline) |
Critical Thresholds:
| Structural Indicator | 2025 Baseline | 2030 (No Reform) | 2035 (No Reform) | Vision 2050 Target | Gap |
|---|---|---|---|---|---|
| Manufacturing Share of GDP | 8-9% | 9-10% | 10-12% | 20-25% | -13 to -15 pp |
| Agricultural Employment | 65% | 60% | 55% | 35-40% | -15 to -20 pp |
| Formal Employment | 20-24% | 26-28% | 30-35% | 50-60% | -20 to -30 pp |
| Tax Revenue (% GDP) | 13.1% | 14.5% | 16.0% | 20-22% | -4 to -6 pp |
| Poverty ($3/day) | 49.0% | 44-46% | 40-42% | 15-20% | -20 to -27 pp |
| GDP Per Capita | $1,342 | $1,750 | $2,200 | $3,500-4,000 | -$1,300 to -$1,800 |
| Human Development Indicator | Crisis Scenario (2035) | Current Trajectory (2035) | Reform Scenario (2035) |
|---|---|---|---|
| Human Capital Index | 0.32 (decline) | 0.42 (modest gain) | 0.52 (major improvement) |
| Life Expectancy | 65 years | 68 years | 72 years |
| Mean Years Schooling | 7.5 years | 8.5 years | 10.5 years |
| Infant Mortality (per 1,000) | 45 | 35 | 25 |
| Malnutrition Rate | 35% | 28% | 18% |
| Country | Debt-to-GDP (%) | External Debt (% Total) | Debt Service (% Revenue) | Revenue (% GDP) | GDP Growth (%) | Poverty ($3/day) | Assessment |
|---|---|---|---|---|---|---|---|
| Tanzania | 53.4% | 69.5% | 25% | 13.1% | 6.0% | 49% | High vulnerability |
| Kenya | 68.5% | 52% | 35% | 15.2% | 5.3% | 45% | Debt distress |
| Uganda | 51.2% | 48% | 22% | 14.8% | 5.5% | 47% | Moderate risk |
| Rwanda | 73.0% | 68% | 28% | 22.5% | 7.8% | 38% | High debt, high revenue |
| Ethiopia | 58.4% | 65% | 30% | 11.5% | 6.1% | 55% | Restructuring ongoing |
| EAC Average | 61.0% | 60% | 28% | 15.5% | 6.1% | 47% | — |
Key Findings:
| Country | Manufacturing (% GDP) | Agriculture Employment (%) | Formal Employment (%) | Tax Revenue (% GDP) | Verdict |
|---|---|---|---|---|---|
| Tanzania | 8-9% | 65% | 20-24% | 13.1% | Stalled transformation |
| Kenya | 11% | 54% | 28% | 15.2% | Moderate progress |
| Rwanda | 17% | 42% | 35% | 22.5% | Strong transformation |
| Vietnam (comparison) | 27% | 38% | 52% | 18.5% | Successful transformation |
| Bangladesh (comparison) | 32% | 40% | 48% | 10.2% | Manufacturing success |
Critical Insight: Tanzania's 8-9% manufacturing has stagnated for 30 years, while successful transformers (Vietnam, Bangladesh, Rwanda) achieved 17-32% through deliberate industrial policy, export promotion, and FDI attraction.
| Priority Action | Target Outcome | Implementation Steps | Fiscal Impact | Timeline |
|---|---|---|---|---|
| 1. Revenue Mobilization (CRITICAL) | Raise revenue from 13.1% to 16% of GDP | • Implement MTRS aggressively • Digital tax systems • Expand tax base • Reduce exemptions | +TZS 7 trillion annually | 2026-2027 |
| 2. Debt Management Reform | Reduce commercial debt share from 35% to 20% | • Prioritize concessional financing • Extend maturity profiles • Hedge currency risk | Save TZS 2-3 trillion in service costs | 2026-2028 |
| 3. Expenditure Efficiency | Eliminate waste, focus on high-return projects | • Zero-based budgeting • Project prioritization • Clearance of arrears | Save TZS 1.5 trillion annually | Immediate |
| 4. Social Protection Expansion | Cover 25% of poor (from <10%) | • Targeted cash transfers • School feeding programs • Health insurance subsidies | Cost TZS 1.2 trillion (funded by revenue gains) | 2026-2027 |
| Structural Reform Area | Current State | 2030 Target | Key Interventions | Expected Impact |
|---|---|---|---|---|
| Agricultural Productivity | 3% growth, low yields | 6-7% growth, doubled yields | • Irrigation: 500,000 ha • Mechanization subsidy • Extension services • Storage infrastructure | • Lift 10M people from poverty • Reduce food inflation • Export growth |
| Manufacturing Development | 8-9% of GDP | 15% of GDP | • Industrial zones • Tax incentives for exporters • Skills training • Infrastructure (energy, transport) | • Create 2M formal jobs • Diversify exports • Raise productivity |
| Financial Sector Deepening | Private credit 23.5% of GDP | 35% of GDP | • Credit bureau expansion • Collateral reform • SME financing schemes • Mobile money integration | • Enable private sector growth • Reduce informality • Mobilize savings |
| Human Capital Investment | HCI: 0.39 | HCI: 0.50 | • Education spending to 6% GDP • Health spending to 6% GDP • Teacher training • Health infrastructure | • Raise productivity • Enable structural transformation • Reduce poverty |
| Transformation Pillar | 2025 Baseline | 2035 Vision | Key Policies | Success Indicators |
|---|---|---|---|---|
| Economic Diversification | 65% agriculture employment | 40% agriculture employment | • Manufacturing export zones • Tourism infrastructure • ICT sector promotion • Value addition in extractives | • Manufacturing 20% of GDP • Services 50% of GDP • Export diversification |
| Inclusive Growth | 49% poverty | 25% poverty | • Progressive taxation • Universal basic services • Land reform • Financial inclusion | • Gini falls to 35 • Bottom 50% income share rises to 20% • Real wage growth 3-4% annually |
| Fiscal Sustainability | 13.1% revenue, 53% debt | 20% revenue, 38% debt | • Tax base expansion • Natural resource taxation • Property taxation • Efficient spending | • Debt service <15% revenue • Fiscal deficit <2% GDP • Public investment 8-10% GDP |
| Institutional Capacity | Weak revenue authority, PFM gaps | Strong institutions | • Digitalization • Anti-corruption • Judiciary reform • Transparency | • Tax collection efficiency >90% • Low corruption perception • Strong rule of law |
Tanzania faces a critical paradox:
Strong GDP growth (6%) + Rising debt (54% of GDP) + Stagnant poverty (49%) = Non-sustainable trajectory
Capital-intensive sectors (mining, finance) 15-19% growth
↓
Employs <5% of workforce
↓
Benefits flow to top 10% (35-40% of income)
↓
Inequality rises
Finances infrastructure and budget deficits
↓
20-25% of revenue to debt service
↓
Crowds out social spending (health 3-4%, education 3.5% of GDP)
↓
Fiscal space shrinks
Employed in low-growth agriculture (65%)
↓
Sector growth: 3%
↓
Real wages: 0% growth (2020-2025)
↓
Poverty: 49% (barely changed in 13 years)
| Outcome | Probability | 2035 Debt-to-GDP | 2035 Poverty ($3/day) | Key Determinants |
|---|---|---|---|---|
| Reform Success | 20-25% | 38% | 35-38% | • Revenue to 18-20% GDP • Manufacturing to 15-20% GDP • Agricultural productivity doubles |
| Current Trajectory (Baseline) | 50-60% | 65% | 44-46% | • Minimal reforms • Structural transformation stalls • Debt keeps rising |
| Crisis Scenario | 20-25% | 78% | 50-55% | • External shocks • Policy failures • Debt default/restructuring |
Tanzania has a 5-year window to:
Failure to act means:
Success requires:
Debt itself is not the enemy—it can finance transformation if used wisely.
The real challenges are:
Without addressing these structural issues, even sustainable debt levels won't deliver inclusive development.
Report Prepared By: TICGL Economic Research Division
Date: February 6, 2026
Contact: economist@ticgl.com
Research Tags:
#TanzaniaNationalDebt #DebtSustainability #InclusiveGrowthTZ #PublicFinanceTanzania #ExternalDebtRisk #FiscalSpace #DebtAndDevelopment #EconomicTransformationTZ #PovertyAndGrowth #Vision2050Tanzania
Lead Economist, TICGL Economic Research Division
Amran Bhuzohera is a distinguished economist specializing in macroeconomic policy, debt sustainability analysis, and inclusive economic development in East Africa. With extensive experience in public finance and development economics, Amran leads the economic research team at Tanzania Investment and Consultant Group Ltd (TICGL).
His research focuses on the intersection of fiscal policy, structural transformation, and poverty reduction, with particular expertise in analyzing Tanzania's economic trajectory and development challenges. Amran's work has been instrumental in shaping policy discussions on debt management, revenue mobilization, and inclusive growth strategies.
At TICGL, Amran directs comprehensive economic research projects, providing data-driven insights to policymakers, investors, and development partners. His analytical approach combines rigorous quantitative analysis with deep contextual understanding of Tanzania's economic landscape.
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