Tanzania’s external debt has surged from 2,469.7 USD Million in December 2011 to 34,056 USD Million in March 2025, representing a 13.8-fold increase over 14 years, or an average annual growth rate of approximately 20.8%. This dramatic rise reflects a combination of economic, infrastructural, and policy drivers that have fueled borrowing to support Tanzania’s development ambitions. Below, I outline the key factors driving this growth, supported by figures and data from available sources, including the Bank of Tanzania and other economic analyses.

1. Economic Drivers

Tanzania’s economic growth and structural transformation goals have necessitated significant external borrowing to bridge fiscal deficits and finance development projects. Key economic factors include:

• Fiscal Deficits and Revenue Shortfalls: Tanzania’s fiscal deficit has consistently required external financing, as tax revenues (e.g., 13% of GDP in 2024) remain low compared to regional peers. The fiscal deficit was 3.8% of GDP in 2022/23, up from 3.4% in 2021/22, driven by increased public spending. To cover this, external debt rose to USD 34.1 billion (TZS 91.29 trillion at TZS 2,677/USD) by March 2025, with 78.3% held by the central government.
• Foreign Exchange Needs: A 2.6% shilling depreciation in 2024/25 and an 8% depreciation in 2023 increased the cost of servicing USD-denominated debt (67.7% of external debt, or USD 23.1 billion). Declining export revenues from commodities like coffee (-2%) and sugar (-1.5%) strained foreign exchange reserves, necessitating borrowing to maintain import cover (e.g., USD 5.7 billion, 3.8 months of imports in 2025).
• Economic Growth Ambitions: Tanzania’s GDP grew from USD 33.2 billion in 2011 to USD 75.5 billion in 2022, with projections of 5.6% growth in 2024 and 6% in 2025. This growth, driven by agriculture, manufacturing, and tourism, required external financing to sustain investments in productive sectors. For example, foreign direct investment (FDI) rose to USD 922 million in 2021, supporting projects like the Kabanga Nickel Project, which increased borrowing needs.

2. Infrastructural Drivers

Tanzania’s ambitious infrastructure agenda has been a primary driver of external debt growth, with significant borrowing to fund transformative projects in transport, energy, and urban development. Key projects include:

• Standard Gauge Railway (SGR): The SGR, a flagship project to connect Dar es Salaam to inland regions and neighboring countries, has been a major contributor to debt growth. The project’s cost, estimated at USD 7.6 billion for multiple phases, has been largely financed through external loans, particularly from China and multilateral institutions.
• Energy Infrastructure: Investments in energy, such as the 532 km gas pipeline from Mnazi Bay to Dar es Salaam (completed in 2015, costing USD 1.2 billion) and plans to increase electricity capacity to 10,000 MW by 2025, have driven borrowing. In 2013, 49.7% of electricity came from natural gas, and projects like the Ntorya gas field (projected to produce 40 million cubic feet/day by 2025) required external financing.
• Port and Transport Upgrades: The modernization of Dar es Salaam Port, including a USD 250 million investment by DP World (UAE) in 2023, and the East African Crude Oil Pipeline (EACOP, USD 5 billion), have increased external debt. These projects aim to position Tanzania as a regional trade hub.
• World Bank Financing: As of March 2025, 48% of the World Bank’s USD 10 billion portfolio in Tanzania supports infrastructure, including roads, railways, and power projects, significantly contributing to the external debt stock.

3. Policy Drivers

Government policies aimed at economic diversification, poverty reduction, and structural reforms have shaped borrowing patterns, with a focus on concessional and non-concessional loans. Key policy drivers include:

• Concessional Borrowing from Multilateral Institutions: Multilateral creditors account for 53.9% of external debt (USD 18.3 billion) as of January 2025, with the World Bank, IMF, and African Development Bank providing concessional loans. In 2021, the IMF provided USD 567.25 million in emergency assistance for COVID-19 recovery, and the 2022–2025 Extended Credit Facility (ECF) program unlocked USD 150 million in 2025 to support fiscal sustainability.
• Non-Concessional Borrowing: External non-concessional borrowing has risen to finance infrastructure, accounting for 36.3% of external debt (USD 12.4 billion) in January 2025. Commercial creditors, including Chinese loans for projects like the SGR, have driven debt growth, increasing exposure to higher interest rates.
• Vision 2025 and Development Goals: Tanzania’s Vision 2025 aims for a GDP growth rate of 8% annually, requiring investments in infrastructure, education, and health. The FY 2024/25 budget of TZS 49.35 trillion (USD 18.4 billion) included TZS 29.41 trillion (59.6%) from tax revenue, with the deficit financed by external borrowing. The planned 13.4% spending increase to TZS 57.04 trillion in FY 2025/26 further drives borrowing.
• Business Environment Reforms: Policies to improve the investment climate, such as tax code revisions and the creation of the Tanzania Investment Centre, have attracted FDI but also increased borrowing for co-financed projects. For example, Chinese investments in the Mchuchuma coal and Liganga iron ore projects (USD 3 billion) in 2011 required complementary government borrowing.

Quantitative Insights

• Debt Growth Trajectory:
  • 2011: USD 2,469.7 million (Bank of Tanzania).
  • 2019: USD 22.4 billion (40% of GDP, 6% YoY increase from 2018).
  • 2023: USD 32,090 million (disbursed, January 2025).
  • March 2025: USD 34,056 million, a 6.1% increase from January 2025 (USD 32,090 million).

• Debt-to-GDP Ratio: Rose from 32.68% in 2013 to 46.87% in 2023 (total public debt), with external debt at ~32-35% of GDP in 2025, assuming a GDP of ~USD 100 billion.
• Debt Composition (January 2025):
  • Multilateral: 53.9% (USD 18.3 billion).
  • Commercial: 36.3% (USD 12.4 billion).
  • Bilateral: 4.2% (USD 1.4 billion).
  • Export Credit: 5.6% (USD 1.9 billion).
• Debt Servicing: Absorbs ~40% of government expenditures, with external debt service estimated at USD 1-2 billion annually and domestic at TZS 5.31 trillion in 2025.

Challenges and Risks

• Exchange Rate Risks: With 67.7% of external debt in USD, the 2.6% shilling depreciation in 2024/25 increases servicing costs by approximately TZS 2.38 trillion for the USD-denominated portion.
• Global Economic Pressures: The IMF’s global growth forecast of 2.8% for 2025 and rising interest rates elevate borrowing costs, particularly for non-concessional loans.
• Fiscal Space Constraints: High debt servicing limits investments in social sectors, with 3% of GDP spent on debt servicing in 2024.
• COVID-19 Impact: Emergency borrowing, including USD 567.25 million from the IMF in 2021, contributed to debt spikes to address health and economic costs.

Conclusion

The 13.8-fold increase in Tanzania’s external debt from 2,469.7 USD Million in 2011 to 34,056 USD Million in March 2025 is driven by economic needs (fiscal deficits, foreign exchange shortages), major infrastructure projects (SGR, energy, ports), and policy choices favoring concessional and non-concessional borrowing to achieve Vision 2025 goals. While debt remains sustainable (moderate risk per IMF DSA), with a debt-to-GDP ratio of ~32-35%, challenges like shilling depreciation and high debt servicing costs underscore the need for prudent fiscal management and revenue mobilization.

This table consolidates the key figures driving Tanzania’s external debt growth, highlighting economic factors (fiscal deficits, GDP growth), infrastructure projects (SGR, energy, ports), and policy decisions (concessional and non-concessional borrowing). The 13.8-fold increase reflects Tanzania’s development ambitions, balanced by a sustainable debt-to-GDP ratio of ~32-35% in 2025.

Notes:

• Debt Growth: From 2,469.7 USD Million (2011) to 34,056 USD Million (Mar 2025), driven by fiscal deficits, infrastructure, and policy goals.
• Infrastructure Costs: SGR (USD 7.6 billion), gas pipeline (USD 1.2 billion), and port upgrades (USD 250 million) are major contributors.
• Debt Composition: Multilateral (53.9%, USD 18.3 billion), commercial (36.3%, USD 12.4 billion), bilateral (4.2%, USD 1.4 billion), export credit (5.6%, USD 1.9 billion) as of Jan 2025.
• Economic Context: GDP growth from USD 33.2 billion (2011) to ~USD 100 billion (2025) supports debt sustainability, but shilling depreciation (8% in 2023, 2.6% in 2024/25) increases servicing costs.
• Policy Impact: Vision 2025 and FY 2024/25 budget (TZS 49.35 trillion, USD 18.4 billion) drive borrowing, with 59.6% funded by taxes and the rest by loans.

Tanzania’s external debt has shown a significant upward trend, reaching 35,039.8 USD Million in February 2025, up from 34,551.4 USD Million in January 2025, according to the Bank of Tanzania. This marks a month-on-month increase of approximately 488.4 USD Million or 1.41%. The external debt has grown steadily, averaging 20,062.78 USD Million from 2011 to 2025, with a record high of 34,936.5 USD Million in February 2025 and a low of 2,469.7 USD Million in December 2011. This reflects a substantial increase over the years, driven by investments in infrastructure, energy, and other development projects.

Tanzania’s External Debt in Context

Tanzania’s external debt is a critical indicator of its economic position within Africa and East Africa. To provide a comprehensive understanding, let’s compare Tanzania’s external debt to other African and East African countries, analyze its debt-to-GDP ratio, and explore the factors contributing to its debt profile.

Comparison with African Countries

The provided data lists external debt for several African countries, with figures converted to USD Million where necessary for comparison. Using the most recent data from the table and supplementing with additional context:

• South Africa: 168,379 USD Million (Dec 2024) – The highest external debt in the dataset, reflecting South Africa’s position as one of Africa’s largest economies.
• Egypt: 155,204 USD Million (Sep 2024) – Another major economy with significant external borrowing, driven by infrastructure and energy projects.
• Angola: 50,260 USD Million (Dec 2023) – High debt due to oil-related investments and reliance on external financing.
• Nigeria: 42,900 USD Million (Sep 2024) – A major oil-producing nation with considerable external debt, though lower than Tanzania’s relative to GDP.
• Tanzania: 34,056 USD Million (Mar 2025) – Ranks among the top tier of African countries in terms of external debt, reflecting its ambitious development agenda.
• Ghana: 28,300 USD Million (Dec 2024) – Lower than Tanzania, but Ghana faces higher debt distress risks due to a higher debt-to-GDP ratio.
• Rwanda: 7,916 USD Million (Dec 2023) – An East African neighbor with significantly lower external debt than Tanzania.
• Kenya: 5,057 KES Billion (approx. 37,173 USD Million at an exchange rate of 1 KES = 0.00735 USD, Dec 2024) – Comparable to Tanzania, but slightly higher, reflecting Kenya’s larger economy.
• Burundi: 1,873,263 BIF Million (approx. 650 USD Million at an exchange rate of 1 BIF = 0.000347 USD, Dec 2024) – Significantly lower, reflecting Burundi’s smaller economy.

Tanzania’s external debt of 34,056 USD Million (Mar 2025) places it among the top 10 African countries for external debt, behind economic giants like South Africa, Egypt, and Nigeria, but ahead of smaller economies like Rwanda and Burundi. This reflects Tanzania’s growing economic ambitions but also its increasing reliance on external financing.

Comparison with East African Community (EAC) Countries

Within East Africa, Tanzania’s external debt is significant but not the highest. Key EAC countries include:

• Kenya: Approximately 37,173 USD Million (Dec 2024) – Slightly higher than Tanzania, driven by large infrastructure projects like the Standard Gauge Railway (SGR).
• Tanzania: 34,056 USD Million (Mar 2025) – A close second, with debt growth tied to infrastructure, energy, and mining investments.
• Rwanda: 7,916 USD Million (Dec 2023) – Much lower, reflecting Rwanda’s smaller economy and more cautious borrowing.
• Uganda: Data not provided, but recent estimates suggest around 20,000 USD Million (2023), lower than Tanzania due to a less diversified economy.
• Burundi: 650 USD Million (Dec 2024) – Minimal debt, constrained by its small economy and political instability.

Tanzania’s external debt is comparable to Kenya’s, positioning it as a major borrower in the EAC. However, its debt-to-GDP ratio and risk profile are more favorable than some peers, as discussed below.

Debt-to-GDP Ratio and Sustainability

Tanzania’s external debt-to-GDP ratio provides insight into its debt sustainability. In 2023, Tanzania’s public debt (including external and domestic) was 46.87% of GDP, with external debt accounting for approximately 70.4% of total public debt (2023 data). Assuming a nominal GDP of 78 USD Billion in 2023 (projected to grow to 105.1 USD Billion in 2022, adjusting for inflation and growth), the external debt of 34,056 USD Million in March 2025 translates to roughly 32-35% of GDP, depending on GDP estimates for 2025.

• Comparison with African Peers:
  • South Africa: External debt at 168,379 USD Million with a GDP of approximately 405 USD Billion (2023) yields a debt-to-GDP ratio of ~41.6%, higher than Tanzania.
  • Egypt: 155,204 USD Million with a GDP of 393 USD Billion (2023) results in a ratio of ~39.5%, also higher.
  • Nigeria: 42,900 USD Million with a GDP of 362 USD Billion (2023) gives a ratio of ~11.8%, significantly lower due to Nigeria’s larger economy.
  • Ghana: 28,300 USD Million with a GDP of 76 USD Billion (2023) results in a ratio of ~37.2%, indicating higher distress risk.
  • Rwanda: 7,916 USD Million with a GDP of 14 USD Billion (2023) yields a ratio of ~56.5%, much higher than Tanzania, indicating greater vulnerability.
• East African Context:
  • Kenya: 37,173 USD Million with a GDP of 112 USD Billion (2023) results in a ratio of ~33.2%, similar to Tanzania.
  • Rwanda: As noted, ~56.5%, significantly higher.
  • Burundi: 650 USD Million with a GDP of 2.6 USD Billion (2023) yields a ratio of ~25%, lower but less relevant due to its small economy.

Tanzania’s external debt-to-GDP ratio of ~32-35% is moderate compared to peers, and its public debt-to-GDP ratio of 46.87% (2023) is below the regional benchmark of 55% for low-income countries, indicating sustainable debt levels. The IMF’s 2024 Debt Sustainability Analysis (DSA) classifies Tanzania’s risk of external debt distress as low, supported by prudent fiscal policies and concessional borrowing.

Composition of Tanzania’s External Debt

As of December 2019, Tanzania’s external debt was USD 22.4 Billion (40% of GDP), with the central government holding 78%, the private sector 21%, and public corporations 0.4%. The debt is primarily owed to:

• Multilateral institutions: 46% (e.g., World Bank, IMF, African Development Bank)
• Commercial sources: 34%
• Export credit: 11%
• Bilateral institutions: 9% (e.g., China, India).

By currency, 68.9% of external debt is denominated in USD, followed by the Euro, which reduces exposure to currency fluctuations but increases repayment burdens when the Tanzanian shilling depreciates (8% depreciation in 2023).

Drivers of External Debt

Tanzania’s external debt growth is driven by:

1. Infrastructure Investments: Large-scale projects like the Standard Gauge Railway (SGR), Dar es Salaam Port expansion, and energy projects (e.g., gas pipeline from Mnazi Bay to Dar es Salaam) require significant borrowing.
2. Economic Diversification: Investments in mining (gold, nickel, graphite), manufacturing, and tourism to reduce reliance on agriculture.
3. COVID-19 Response: Non-concessional borrowing during the pandemic to support the economy, increasing debt levels.
4. Foreign Direct Investment (FDI): FDI rose to USD 922 Million in 2021, with projects like the Kabanga Nickel Project requiring external financing.

Risks and Challenges

• Foreign Exchange Shortages: The Tanzanian shilling’s 8% depreciation in 2023 and 0.5% in 2022 increased debt servicing costs in local currency.
• Election-Related Pressures: The 2025 elections may increase fiscal spending, potentially pausing fiscal consolidation efforts.
• Global Economic Slowdown: Reduced tourism receipts and export demand could strain debt repayment capacity.
• Debt Service Burden: Debt service absorbs ~40% of government expenditures, limiting fiscal space for social spending.

Position in Africa and East Africa

• Africa: Tanzania ranks among the top 10 African countries for external debt, behind South Africa, Egypt, and Nigeria, but its moderate debt-to-GDP ratio and low distress risk make it a relatively stable borrower. Its diversified economy (agriculture, mining, tourism) and stable political environment enhance its attractiveness for FDI, unlike higher-risk countries like Ghana or Zambia.
• East Africa: Tanzania is a close second to Kenya in external debt, with a stronger growth outlook (6% projected GDP growth in 2025 vs. Kenya’s 5%). Its lower debt-to-GDP ratio compared to Rwanda and stable macroeconomic policies position it as a regional economic powerhouse, though Kenya’s larger economy gives it a slight edge.

Conclusion

Tanzania’s external debt of 34,056 USD Million in March 2025 reflects its ambitious development agenda but remains sustainable, with a debt-to-GDP ratio of ~32-35% and low distress risk. Compared to African peers, Tanzania’s debt is moderate, and within East Africa, it competes closely with Kenya while outperforming smaller economies like Rwanda and Burundi. Continued fiscal discipline, concessional borrowing, and economic diversification will be key to maintaining debt sustainability.

This table highlights Tanzania’s external debt of 34,056 USD Million (Mar 2025) as moderate within Africa, comparable to Kenya in East Africa, and sustainable relative to its GDP. Its debt-to-GDP ratio of ~32-35% is lower than peers like Rwanda (56.5%) and Angola (59.1%), positioning Tanzania favorably in terms of debt sustainability.

Notes:

• Tanzania: External debt increased from 34,551.4 USD Million (Jan 2025) to 35,039.8 USD Million (Feb 2025), with 34,056 USD Million reported for Mar 2025. Debt-to-GDP ratio estimated at 32-35% based on projected GDP growth to ~100 USD Billion by 2025.
• Kenya: Converted from 5,057 KES Billion using 1 KES = 0.00735 USD (Dec 2024).
• Burundi: Converted from 1,873,263 BIF Million using 1 BIF = 0.000347 USD (Dec 2024).
• GDP Estimates: Sourced from IMF/World Bank 2023 data, adjusted for inflation/growth where necessary.
• Debt-to-GDP Ratio: Calculated as (External Debt / GDP) * 100. Ratios are approximate due to varying reference dates and GDP projections.

Tanzania’s mining GDP growth from 197,832.14 TZS million in Q4 2008 to 2,317,959 TZS million in Q4 2024 (approximately 0.923 billion USD at 2,510 TZS/USD) represents a remarkable 1,072% increase in nominal terms, averaging an annual growth rate of about 16.7% over the 16-year period. This growth, driven by gold, tanzanite, coal, and emerging critical minerals like lithium and graphite, has significantly shaped Tanzania’s economic development through increased GDP contribution, export earnings, tax revenue, job creation, and infrastructure development, while also presenting challenges that influence long-term sustainability.

Increased Contribution to National GDP

The mining sector’s growth has elevated its share of Tanzania’s GDP from approximately 3.5% in 2008 to 10.1% in 2024, surpassing the government’s 2026 target of 10%. This shift has transformed mining into a cornerstone of Tanzania’s economy, reducing reliance on agriculture (which contributes ~25% to GDP) and tourism. The sector’s 2,317,959 TZS million contribution in Q4 2024 reflects a robust extractive industry, with gold alone accounting for a significant portion due to Tanzania’s position as Africa’s fourth-largest gold producer (~40–47 metric tons annually). This has:

• Diversified the Economy: Mining’s increased GDP share has balanced Tanzania’s economic structure, making it less vulnerable to agricultural volatility caused by weather or global commodity price fluctuations.
• Boosted Economic Growth: Tanzania’s overall GDP growth averaged 6–7% annually in recent years, with mining’s contribution helping sustain this trajectory. The sector’s growth has supported Tanzania’s ambition to become a middle-income economy, achieved in 2020 with a GNI per capita of USD 1,080 (World Bank).

Enhanced Export Earnings and Foreign Exchange

The mining sector’s expansion has significantly increased Tanzania’s export earnings, strengthening its balance of payments and foreign exchange reserves. Key figures include:

• Mineral Exports: In 2020, mineral exports reached USD 3.6 billion, with gold dominating. By 2024, total exports (including minerals) hit USD 16.1 billion, a 15.1% year-on-year increase, with mining playing a pivotal role.
• Specific Commodities: Coal exports surged from USD 23.2 million to USD 228.6 million year-on-year, and diamond exports grew from USD 9.6 million to USD 66.9 million, reflecting diversified mineral contributions.
• Impact: These earnings have stabilized the Tanzanian shilling, funded imports, and supported external debt servicing, contributing to macroeconomic stability. For context, Tanzania’s foreign exchange reserves were USD 5.3 billion in 2023, partly bolstered by mining exports.

Increased Tax Revenue and Fiscal Capacity

The mining sector’s growth has significantly boosted government revenue, enabling public investment in infrastructure and social services:

• Tax Revenue: Mining tax revenue rose by 20.7% to TZS 753.82 billion (approx. USD 0.3 billion) in 2023/2024, with TZS 312.75 billion collected by October 2024 toward a TZS 1 trillion target for 2024/2025.
• Policy Reforms: Regulatory changes, including local content policies and gemstone auctions, have improved revenue collection. The 2017 Mining Act amendments, increasing royalties and government stakes in mining projects, were instrumental.
• Impact: Increased fiscal capacity has funded infrastructure projects like roads, ports, and the East Africa Crude Oil Pipeline, as well as social programs in education and healthcare, enhancing living standards. For example, Tanzania’s Human Development Index (HDI) improved from 0.488 in 2008 to 0.549 in 2022, partly due to mining-driven economic growth.

Job Creation and Social Impact

The mining sector’s expansion has generated significant employment, contributing to poverty reduction and economic inclusivity:

• Employment: The sector employed 310,000 Tanzanians in 2020, with 19,356 new jobs created by March 2024 (97% for Tanzanians). This includes direct jobs in mining and indirect jobs in related industries like logistics and processing.
• Local Empowerment: Policies mandating local hiring and training have ensured that economic benefits reach Tanzanian communities, particularly in mining regions like Geita and Shinyanga.
• Impact: Job creation has reduced unemployment (estimated at 2.6% in 2023) and supported rural economies, where mining is a major employer. However, challenges like artisanal mining conflicts and environmental concerns persist.

Infrastructure and Investment Attraction

The mining sector’s growth has spurred infrastructure development and attracted foreign direct investment (FDI):

• Infrastructure: Mining revenue has supported projects like the USD 30 billion Likong’o-Mchinga LNG plant and the Standard Gauge Railway, improving connectivity and economic efficiency.
• FDI: Investments like USD 3.15 billion from Australian companies for rare earths and graphite, and Tesla’s contract for anode active material, highlight Tanzania’s appeal in the global critical minerals market.
• Impact: These developments have enhanced Tanzania’s industrial capacity and positioned it as a key player in the energy transition, with minerals like lithium and graphite critical for batteries and renewable energy technologies.

Challenges and Risks to Economic Development

While the mining sector’s growth has been transformative, it poses challenges that could affect long-term economic development:

• Resource Dependency: The 10.1% GDP share from mining risks over-reliance, exposing Tanzania to global commodity price volatility (e.g., gold price fluctuations).
• Environmental Concerns: Mining activities, particularly in ecologically sensitive areas, have raised concerns about deforestation and water pollution, potentially undermining sustainable development.
• Inequitable Benefits: Despite job creation, wealth distribution remains uneven, with some mining communities still facing poverty (Tanzania’s poverty rate was 26.4% in 2020).
• Governance Risks: Past disputes with mining companies (e.g., Acacia Mining in 2017) highlight the need for consistent and transparent policies to maintain investor confidence.

Position in Africa and East Africa

Tanzania’s mining GDP of 0.923 billion USD in Q4 2024 ranks it among Africa’s top five mining economies, behind South Africa (11.5 billion USD), Egypt (5.1 billion USD), and Guinea (4.9 billion USD, 2023 data), but ahead of Nigeria (0.625 billion USD) and Ghana (0.446 billion USD). In East Africa, Tanzania leads, surpassing Mozambique (0.545 billion USD), Kenya (0.189 billion USD), Uganda (0.226 billion USD), and Rwanda (0.037 billion USD). This leadership enhances Tanzania’s regional influence and supports economic integration through projects like the East Africa Crude Oil Pipeline.

Conclusion

The growth of Tanzania’s mining GDP from 197,832.14 TZS million in 2008 to 2,317,959 TZS million in 2024 has been a catalyst for economic development, increasing GDP share to 10.1%, boosting exports to USD 16.1 billion (2024), generating TZS 753.82 billion in tax revenue, and creating 310,000+ jobs. These outcomes have supported macroeconomic stability, infrastructure development, and poverty reduction, positioning Tanzania as a middle-income economy and East Africa’s mining leader. However, challenges like resource dependency and environmental impacts require careful management to ensure sustainable development. By leveraging its mineral wealth and continuing policy reforms, Tanzania can further enhance its economic trajectory.

"Key Figures: Tanzania’s Mining Boom and Economic Development, 2008–2024"

Notes

• Exchange Rate: Approximate rate of 2,510 TZS/USD used for 2024 conversions (May 2025).
• Data Sources: National Bureau of Statistics (Tanzania) for mining GDP; additional figures from web sources and X posts for exports, employment, and HDI.
• Context: The table captures the mining sector’s role in GDP growth, export earnings, tax revenue, job creation, and infrastructure, while noting challenges like resource dependency and environmental concerns.
• Comparative Figures: Africa/East Africa rankings based on Q4 2024 data (or Dec 2023 for Guinea), converted to USD using approximate exchange rates (e.g., ZAR/USD = 17.7, EGP/USD = 49.5, MZN/USD = 63.9).

According to the National Bureau of Statistics (NBS) Tanzania, the GDP from mining in Tanzania reached 2,317,959 TZS million (approximately 0.923 billion USD at an exchange rate of about 2,510 TZS per USD) in the fourth quarter of 2024, up from 2,283,791.41 TZS million in the third quarter of 2024. This marks an all-time high, reflecting a year-on-year growth and a significant rise from the historical average of 1,004,540.49 TZS million (2005–2024). The lowest recorded value was 197,832.14 TZS million in Q4 2008, indicating a remarkable increase of over 1,000% in nominal terms over 16 years.

The growth in Tanzania’s mining GDP is driven by:

• Gold Production: Tanzania is Africa’s fourth-largest gold producer (after South Africa, Ghana, and Mali), with annual production of approximately 40–47 metric tons in recent years. Gold exports alone were valued at USD 2.86 billion in 2022/2023, contributing significantly to foreign exchange earnings.
• Diverse Mineral Portfolio: Tanzania mines over 40 types of minerals, including diamonds, tanzanite (unique to Tanzania), coal, copper, nickel, lithium, graphite, and rare earth elements. Notable increases in coal exports (from USD 23.2 million to USD 228.6 million year-on-year) and diamond exports (from USD 9.6 million to USD 66.9 million) have bolstered the sector.
• Policy Reforms: Government initiatives under President Samia Suluhu Hassan, including enhanced regulatory frameworks, gemstone auctions, and local mineral markets, have increased the sector’s GDP contribution from 7.2% in 2021 to 10.1% in 2024, surpassing the 2026 target of 10%.
• Investment and Infrastructure: Investments in mining, such as deals with Australian companies worth USD 3.15 billion for rare earths and graphite, and Tesla’s contract for anode active material, have boosted output.

Tanzania’s Position in Africa

Tanzania’s mining GDP of 2,317,959 TZS million (approx. 0.923 billion USD) in Q4 2024 places it among the top contributors to mining GDP in Africa, though direct comparisons are challenging due to varying currencies and reporting periods. Below is a comparative analysis with key African countries based on the provided data (converted to USD where possible for consistency, using approximate exchange rates as of May 2025):

• Nigeria: 1,039,318 NGN million (approx. 0.625 billion USD, at 1,665 NGN/USD). Despite Nigeria’s larger overall economy, its mining GDP is lower than Tanzania’s in USD terms, reflecting Tanzania’s stronger focus on mining.
• South Africa: 203,866 ZAR million (approx. 11.5 billion USD, at 17.7 ZAR/USD). South Africa, Africa’s top gold producer, significantly outpaces Tanzania due to its larger and more diversified mining sector (gold, platinum, coal).
• Egypt: 252,968 EGP million (approx. 5.1 billion USD, at 49.5 EGP/USD). Egypt’s mining sector, driven by phosphate and gold, exceeds Tanzania’s in USD terms but is less dominant in GDP share.
• Ghana: 6,579 GHS million (approx. 0.446 billion USD, at 14.75 GHS/USD). Ghana, Africa’s third-largest gold producer, has a lower mining GDP than Tanzania, highlighting Tanzania’s competitive position.
• Guinea: 42,871 GNF billion (approx. 4.9 billion USD, at 8,750 GNF/USD, Dec 2023 data). Guinea’s bauxite-driven mining sector surpasses Tanzania in value, but its data is outdated.
• Zambia: 4,264 ZMW million (approx. 0.165 billion USD, at 25.8 ZMW/USD). Zambia’s copper-focused mining sector contributes less to GDP than Tanzania’s in absolute terms.

Ranking in Africa: Tanzania ranks among the top five African countries in mining GDP contribution, likely behind South Africa, Egypt, and Guinea, but ahead of Nigeria, Ghana, and Zambia in USD terms. Its 10.1% GDP share from mining in 2024 is notably high, compared to South Africa (approx. 7–8%) and Nigeria (less than 1%), underscoring mining’s critical role in Tanzania’s economy.

Tanzania’s Position in East Africa

In East Africa, Tanzania is a leader in mining GDP, surpassing regional peers:

• Kenya: 24,462 KES million (approx. 0.189 billion USD, at 129 KES/USD). Kenya’s mining sector is significantly smaller, focusing on soda ash and small-scale gold mining.
• Uganda: 835 UGX billion (approx. 0.226 billion USD, at 3,700 UGX/USD). Uganda’s mining sector, primarily artisanal gold and limestone, is far less developed than Tanzania’s.
• Mozambique: 34,809 MZN million (approx. 0.545 billion USD, at 63.9 MZN/USD). Mozambique’s mining GDP, driven by coal and gas, is lower than Tanzania’s, despite its larger natural gas potential.
• Rwanda: 50 RWF billion (approx. 0.037 billion USD, at 1,350 RWF/USD). Rwanda’s mining sector (tin, tungsten) is minimal compared to Tanzania’s.

East African Ranking: Tanzania is the top contributor to mining GDP in East Africa in Q4 2024, with a value nearly double that of Mozambique, the next closest competitor. Its 10.1% GDP share from mining far exceeds regional averages, where mining typically contributes 1–5% to GDP in countries like Kenya and Uganda. Tanzania’s leadership is further reinforced by its role in regional coal mining and its hosting of the East Africa Crude Oil Pipeline, enhancing its extractive sector prominence.

Additional Context and Figures

• Tax Revenue: Mining tax revenue in Tanzania surged by 20.7% to TZS 753.82 billion (approx. USD 0.3 billion) in 2023/2024, with TZS 312.75 billion collected by October 2024 toward a TZS 1 trillion target for 2024/2025. This reflects improved regulatory enforcement and local content policies.
• Employment: The sector employed 310,000 Tanzanians in 2020 and created 19,356 jobs by March 2024 (97% for Tanzanians), boosting economic inclusivity.
• Export Earnings: Mineral exports reached USD 3.6 billion in 2020, with gold dominating, and total exports (including minerals) hit USD 16.1 billion in 2024, up 15.1% year-on-year.
• Future Potential: Tanzania’s focus on critical minerals (lithium, nickel, graphite) and projects like the Likong’o-Mchinga LNG plant (valued at USD 30 billion) position it for sustained growth.

Conclusion

Tanzania’s mining GDP of 2,317,959 TZS million in Q4 2024 underscores its robust growth, driven by gold, gemstones, and strategic reforms. In Africa, it ranks among the top five mining economies, behind South Africa, Egypt, and Guinea, but ahead of Nigeria and Ghana. In East Africa, Tanzania is the undisputed leader, with a mining GDP nearly double that of Mozambique and significantly higher than Kenya, Uganda, and Rwanda. Its 10.1% GDP contribution from mining in 2024, coupled with rising tax revenues and export earnings, cements its position as a regional powerhouse, with potential for further growth in critical minerals and natural gas.

"Key Figures: Tanzania’s Mining Boom and Economic Development, 2008–2024"

Tanzania Metrics

Notes

• Exchange Rates (Approx., May 2025): TZS/USD = 2,510; ZAR/USD = 17.7; EGP/USD = 49.5; NGN/USD = 1,665; GHS/USD = 14.75; MZN/USD = 63.9; KES/USD = 129; UGX/USD = 3,700; RWF/USD = 1,350; ZMW/USD = 25.8.
• Tanzania’s Position: Ranks ~4th in Africa (behind South Africa, Egypt, Guinea); 1st in East Africa (ahead of Mozambique, Kenya, Uganda, Rwanda).
• Data Source: National Bureau of Statistics (Tanzania) for Tanzania data; other countries’ figures from provided dataset.

Tanzania’s inflation in March 2025, as detailed in the April 2025 Monthly Economic Review, shows an upward trend in headline inflation, driven primarily by rising food and energy prices, while core inflation has declined. Below, we outline the current inflation trends and their drivers, using specific figures from the document to provide clarity.

Headline Inflation Trend

Figure: Headline inflation rose to 3.3% in March 2025, up from 3.0% in March 2024.

Explanation:

• Trend: The 0.3 percentage point increase indicates a moderate upward trend in overall price levels, but inflation remains within national targets and regional benchmarks of the East African Community (EAC) and Southern African Development Community (SADC).
• Drivers: The document attributes this rise primarily to increases in food and energy prices (Page 3). These components have exerted significant upward pressure on the Consumer Price Index (CPI), which is based on a 2020=100 index.
• Context: Despite the increase, headline inflation is relatively stable, supported by the Bank of Tanzania’s monetary policy, which maintains the Central Bank Rate at 6% to keep inflation expectations below the 5% medium-term target.

Food Inflation Trend

Figure: Food inflation surged to 5.4% in March 2025, up from 1.4% in March 2024.

Explanation:

• Trend: The sharp 4.0 percentage point increase reflects significant price pressures in the food sector, which has a CPI weight of 26.1%.
• Drivers: Higher prices for staple crops—maize, rice, and beans—are the primary drivers, amplified by logistical challenges in transportation due to seasonal heavy rains. These rains disrupted supply chains, increasing costs for producers and traders.
• Mitigation: The National Food Reserve Agency (NFRA) held 587,062 tonnes of food stocks (mainly maize and paddy) and released 32,598 tonnes to local traders by March 2025, which helped mitigate further price spikes. The overall food supply remained adequate, preventing even higher inflation.
• Impact: The document notes that unprocessed food inflation’s contribution to overall inflation has increased, making it a key driver of the 3.3% headline rate.

Core Inflation Trend

Figure: Core inflation decreased to 2.2% in March 2025 from 3.9% in March 2024.

Explanation:

• Trend: The 1.7 percentage point decline indicates easing price pressures from non-food items, which constitute 73.9% of the CPI basket.
• Drivers: Core inflation excludes volatile items like food, energy, and utilities. The reduction suggests stable or declining prices for services and non-food goods, reflecting lower underlying inflationary pressures.
• Impact: The document highlights that core inflation’s contribution to overall inflation has gradually diminished, with unprocessed food inflation taking a larger role. This decline helps moderate the headline inflation rate despite food and energy spikes.

Energy, Fuel, and Utilities Inflation Trend

Figure: Energy, fuel, and utilities inflation increased to 7.9% in March 2025 from 6.6% in March 2024.

Explanation:

• Trend: The 1.3 percentage point rise makes this the highest inflation component, with a CPI weight of 5.7%.
• Drivers: The increase is primarily due to rising prices of petroleum products and wood charcoal, the latter linked to scarcity following seasonal rains (Page 5). The document notes the weight of wood charcoal in the energy component but does not quantify it.
• Impact: High energy inflation significantly contributes to the 3.3% headline rate, as energy costs affect transportation, production, and household expenses, amplifying overall price pressures.

Additional Context and Drivers

• Global Commodity Prices: Rising global fertilizer prices (up 2% to USD 615.13 per tonne) increase agricultural input costs, indirectly contributing to food inflation by raising production expenses. Conversely, a 4% drop in crude oil prices to USD 70.70 per barrel may have tempered energy inflation slightly, though domestic petroleum price hikes dominated.
• Monetary Policy: The Bank of Tanzania’s stable Central Bank Rate (6%) and adequate liquidity management (no reverse repo auctions) help anchor inflation expectations, preventing runaway price increases despite food and energy pressures.
• CPI Dynamics: The CPI weights show food (26.1%) and energy (5.7%) as smaller shares compared to core items (73.9%), but their volatility gives them outsized impacts on headline inflation. Month-on-month data shows food inflation at 2.5% and energy at 2.9% for March 2025, reinforcing their role as key drivers.

Conclusion

In March 2025, Tanzania’s headline inflation rose to 3.3% (from 3.0% in 2024), driven by surging food inflation (5.4%, up from 1.4%) and energy, fuel, and utilities inflation (7.9%, up from 6.6%). Food price increases, fueled by maize, rice, and bean costs and rain-related logistical challenges, and energy price hikes, driven by petroleum and wood charcoal, are the primary drivers. Core inflation’s decline to 2.2% (from 3.9%) moderate’s overall pressures, but unprocessed food’s growing contribution underscores its significance. The NFRA’s 587,062-tonne food stock and 32,598-tonne release helped contain food inflation, keeping headline inflation within EAC and SADC benchmarks.

Key Figures: Tanzania’s Inflation Trends and Drivers (March 2025)

Notes:

• All inflation figures reflect March 2025 unless stated otherwise.
• Food inflation driven by maize, rice, bean prices, and logistical issues from rains.
• Energy inflation driven by petroleum and wood charcoal price hikes.
• Source refer to the April 2025 Monthly Economic Review.

Tanzania’s debt development, as outlined in the April 2025 Monthly Economic Review and recent data, influences economic growth through fiscal constraints and resource allocation. Below, we analyze the debt structure, including domestic and external debt figures, percentage changes, and their implications for growth, using specific figures to illustrate impacts.

Debt Structure and Figures

Figures:

• Domestic Debt: TZS 34.26 trillion in March 2025, with 29% held by commercial banks and 26.5% by pension funds.
• External Debt: USD 34.1 billion (approximately TZS 91.29 trillion at TZS 2,677/USD, based on a 2.6% year-on-year exchange rate depreciation, Page 30), with 78.3% held by the central government and 67.7% denominated in US dollars.
• Total National Debt: TZS 91.7 trillion in 2024/25 budget context.
• Public Debt (Historical): 45.5% of GDP in 2022/23, up from 43.6% in 2021/22.
• Percentage Change: Exact year-on-year percentage changes for March 2025 debt are not provided in the document or search results. However, domestic debt uptake increased through treasury bills and bonds, and external debt grew to USD 34.1 billion (), suggesting continued borrowing. For context, public debt rose by 4.4% (45.5% - 43.6% of GDP) from 2021/22 to 2022/23.

Explanation:

• Domestic Debt: The TZS 34.26 trillion domestic debt finances fiscal deficits, with significant holdings by commercial banks (TZS 9.93 trillion, 29%) and pension funds (TZS 9.08 trillion, 26.5%). Increased borrowing indicates rising deficits, potentially driven by a 13.4% planned spending increase to TZS 57.04 trillion in FY 2025/26.
• External Debt: The USD 34.1 billion (TZS 91.29 trillion) external debt supports development projects, with 78.3% (USD 26.7 billion) held by the central government. The 67.7% USD denomination (USD 23.1 billion) exposes Tanzania to exchange rate risks, amplified by a 2.6%-shilling depreciation.
• Debt Sustainability: The IMF’s Debt Sustainability Analysis (DSA) indicates a moderate risk of external debt distress, with public debt at 35% of GDP in 2024, below the 55% benchmark (). Total debt service was 2.89% of GNI in 2023.

Impact on Economic Growth

Figures and Explanation:

• Fiscal Space Constraints: Limited fiscal space, noted globally, restricts Tanzania’s ability to fund growth. The FY 2024/25 budget of TZS 49.35 trillion includes TZS 29.41 trillion (59.6%) from tax revenue, leaving a deficit financed by domestic (TZS 34.26 trillion) and external (USD 34.1 billion) borrowing. A planned 13.4% spending increase to TZS 57.04 trillion in FY 2025/26 will further rely on debt, with TZS 16.07 trillion (28.2%) from borrowing.
• Debt Servicing Costs: Debt servicing absorbs significant resources. Historically, external debt servicing consumed 40% of government expenditures. In 2023, total debt service was 2.89% of GNI. For March 2025, servicing TZS 34.26 trillion domestic debt (at, e.g., 15.5% lending rates,) and USD 34.1 billion external debt (at concessional rates,) could cost TZS 5.31 trillion and USD 1-2 billion annually, diverting funds from investments. The 2.6%-shilling depreciation increases external debt costs by TZS 2.37 trillion.
• Crowding-Out Effect: Domestic borrowing of TZS 34.26 trillion (29% by banks) raises lending rates to 15.5%, crowding out private investment. Credit to the private sector weakened in Q4 2024, limiting business growth. The 6% Central Bank Rate mitigates this, but high government borrowing (TZS 4,362 billion average,) strains liquidity.
• Growth Projections: GDP growth is projected at 5.4% in 2024 and 6% in 2025, driven by agriculture (26.5% of GDP), construction (13.2%), and mining (9%). However, debt servicing and fiscal constraints could cap growth below the 6.4% potential by 2026.

Global and Domestic Economic Context

Figures and Explanation:

• Global Risks: The IMF’s global growth forecast of 2.8% for 2025 and rising interest rates increase external borrowing costs. Tanzania’s USD 34.1 billion external debt, with 67.7% in USD, faces higher servicing costs amid global tightening.
• Commodity Impacts: Declining coffee (-2%) and sugar (-1.5%) prices reduce export revenues, straining foreign exchange for debt repayment (Page 3). Gold prices at USD 2,983.25/ounce (+3%) and exports at USD 16.1 billion bolster reserves (USD 5.7 billion, 3.8 months of imports,), easing debt pressures.
• Inflation and Policy: Headline inflation at 3.3% and food inflation at 5.4% (Page 4) increase household costs, potentially slowing consumption. The 6% Central Bank Rate and 587,062-tonne food reserves (32,598 tonnes released) stabilize prices, supporting growth.

Opportunities and Mitigation

Figures and Explanation:

• Development Projects: External debt of USD 34.1 billion funds infrastructure (48% of World Bank’s USD 10 billion portfolio,), like the Standard Gauge Railway, boosting long-term growth. Projects worth TZS 14.81 trillion (30% of FY 2024/25 budget,) enhance connectivity and trade.
• Debt Management: The moderate debt distress risk and concessional financing keep debt sustainable. Revenue mobilization (TZS 2.47 trillion collected in March 2025,) and IMF’s USD 441 million ECF/RSF support () reduce reliance on costly borrowing.
• Fiscal Reforms: Plans to raise tax revenue to TZS 29.41 trillion (10% increase,) and reduce the fiscal deficit to 2.5% of GDP by 2024/25 () enhance fiscal space, freeing resources for growth.

Conclusion

Tanzania’s debt, at TZS 34.26 trillion domestic and USD 34.1 billion (TZS 91.29 trillion) external in March 2025, impacts growth by constraining fiscal space and diverting resources to servicing costs (e.g., TZS 5.31 trillion domestic, USD 1-2 billion external annually). A 2.6%-shilling depreciation and high lending rates (15.5%) exacerbate pressures, crowding out private investment. While debt fuels infrastructure (TZS 14.81 trillion in projects), declining exports (coffee -2%) and global risks (2.8% growth) challenge repayment. Prudent policy (6% CBR, USD 5.7 billion reserves) and revenue growth (TZS 29.41 trillion) mitigate risks, supporting 5.4%-6% GDP growth, but fiscal discipline is crucial.

Key Figures: Tanzania’s Debt Development and Economic Growth (March 2025)

Notes:

• Figures reflect March 2025 unless stated otherwise. TZS/USD conversion uses TZS 2,677/USD (Page 30).
• Debt servicing estimates are based on typical rates (15.5% for domestic, concessional for external).
• Percentage change for debt limited to historical data (4.4% public debt increase, 2021/22-2022/23).
• Source: “Page” refers to April 2025 Monthly Economic Review; “Web” refers to search data; “Est.” indicates estimates.
• Domestic borrowing crowds out private investment; external debt funds infrastructure (e.g., TZS 14.81 trillion).

Tanzania’s food inflation is a significant component of its overall inflationary pressures, as detailed in the April 2025 Monthly Economic Review. Below, we compare food inflation with other key inflation components—headline, core, and energy, fuel, and utilities inflation—using specific figures from the document to highlight their relative levels, trends, and drivers.

Food Inflation

Figure: Food inflation was 5.4% in March 2025, up significantly from 1.4% in March 2024.

Explanation:

• Drivers: The increase was primarily due to higher prices for staple crops like maize, rice, and beans, exacerbated by logistical challenges in transportation caused by seasonal heavy rains. These disruptions increased supply chain costs, pushing food prices higher.
• Mitigation: The National Food Reserve Agency (NFRA) held 587,062 tonnes of food stocks (mainly maize and paddy) and released 32,598 tonnes to local traders by March 2025, which helped mitigate further price spikes.
• Context: Despite the rise, the overall food supply remained adequate, and food inflation’s contribution to overall inflation has grown, particularly from unprocessed food.

Headline Inflation

Figure: Headline inflation was 3.3% in March 2025, up from 3.0% in March 2024.

Explanation:

• Comparison: Food inflation (5.4%) is notably higher than headline inflation (3.3%), indicating that food prices are a major driver of overall price increases. The document notes that headline inflation’s rise was largely attributed to increases in food and energy prices.
• Context: Headline inflation includes all components of the Consumer Price Index (CPI), such as food, energy, and non-food items. Despite the uptick, it remains within national targets and regional benchmarks of the East African Community (EAC) and Southern African Development Community (SADC).
• Relative Impact: The higher food inflation rate suggests that food prices are pulling headline inflation upward, though other components moderate the overall rate.

Core Inflation

Figure: Core inflation decreased to 2.2% in March 2025 from 3.9% in March 2024.

Explanation:

• Comparison: Food inflation (5.4%) is more than double core inflation (2.2%), highlighting a stark contrast. Core inflation, which excludes volatile items like food, energy, and utilities, reflects underlying price pressures from non-food items.
• Trend: The decline in core inflation indicates reduced pressure from non-food items, such as services and goods excluding food and energy. The document notes that core inflation’s contribution to overall inflation has diminished, with unprocessed food inflation taking a larger role.
• Context: The lower core inflation rate helps keep headline inflation in check, but the high food inflation underscores the volatility of food prices compared to more stable non-food components.

Energy, Fuel, and Utilities Inflation

Figure: Energy, fuel, and utilities inflation increased to 7.9% in March 2025 from 6.6% in March 2024.

Explanation:

• Comparison: Energy, fuel, and utilities inflation (7.9%) is the highest among the components, surpassing food inflation (5.4%). This category saw the largest year-on-year increase, driven by rising prices of petroleum products and wood charcoal, the latter linked to scarcity following seasonal rains.
• Context: The document highlights that petroleum and wood charcoal price hikes were significant contributors. The weight of wood charcoal in the energy component of the CPI basket is noted but not quantified.
• Relative Impact: Energy inflation’s high rate amplifies overall price pressures more than food inflation, though both are key drivers of the 3.3% headline inflation.

Contribution to Overall Inflation

Figure: Unprocessed food inflation’s contribution to overall inflation has increased, while core inflation’s contribution has gradually diminished.

Explanation:

• Trend: The document indicates a shift in inflation dynamics, with unprocessed food (part of food inflation) becoming a more significant driver of headline inflation compared to core inflation. This is evident from food inflation’s high rate (5.4%) versus core inflation’s decline (2.2%).
• Impact: Food and energy inflation (7.9%) together exert stronger upward pressure on headline inflation (3.3%) than core inflation, reflecting the volatility of these components. The NFRA’s release of 32,598 tonnes of food stocks helped temper food inflation’s impact.
• Data Insight: The CPI weights show food and non-alcoholic beverages at 26.1% of the basket, energy, fuel, and utilities at 5.7%, and core items at 73.9%, suggesting food and energy have disproportionate impacts relative to their weights due to their volatility.

Conclusion

In March 2025, Tanzania’s food inflation (5.4%) is significantly higher than headline inflation (3.3%) and core inflation (2.2%) but lower than energy, fuel, and utilities inflation (7.9%). Food inflation, driven by maize, rice, and bean price hikes due to rain-related logistical issues, is a key contributor to overall inflation, alongside energy. Core inflation’s decline reflects easing non-food pressures, but the high food and energy rates highlight their volatility and impact on household costs. The NFRA’s 587,062-tonne food stock and 32,598-tonne release helped mitigate food inflation, keeping headline inflation within national and regional targets.

Key Figures: Tanzania’s Food Inflation vs. Other Inflation Components (March 2025)

Notes:

• All inflation figures reflect March 2025 unless stated otherwise.
• Food inflation driven by maize, rice, bean prices, and logistical issues from rains.
• Energy inflation driven by petroleum and wood charcoal price hikes.
• Source refer to the April 2025 Monthly Economic Review.

Tanzania’s economic growth faces several challenges, both domestic and global, as outlined in the April 2025 Monthly Economic Review. Below, we detail these challenges with specific figures to illustrate their impact, drawing from the document’s data on inflation, commodity markets, logistical issues, and global economic risks.

Rising Food and Energy Inflation

Challenge: Increasing food and energy prices drive headline inflation, reducing purchasing power and potentially slowing economic activity.

Figures and Explanation:

• Headline Inflation: Rose to 3.3% in March 2025 from 3.0% in March 2024, largely due to food and energy price hikes.
• Food Inflation: Surged to 5.4% in March 2025 from 1.4% in March 2024, driven by higher prices for maize, rice, and beans. This increase is attributed to logistical challenges in transportation caused by seasonal heavy rains, which disrupt supply chains and raise costs.
• Energy, Fuel, and Utilities Inflation: Increased to 7.9% in March 2025 from 6.6% in March 2024, primarily due to rising prices of petroleum products and wood charcoal. The rise in wood charcoal prices is linked to scarcity following seasonal rains.
• Impact: Higher food and energy costs strain household budgets, particularly for low-income groups, reducing consumption and potentially dampening economic growth. The document notes that unprocessed food inflation is increasingly contributing to overall inflation, highlighting its significance.

Logistical Challenges Due to Seasonal Rains

Challenge: Seasonal heavy rains disrupt transportation, increasing food prices and complicating supply chain logistics, which hinders economic efficiency.

Figures and Explanation:

• Food Inflation Driver: The 5.4% food inflation in March 2025 was amplified by logistical challenges in transporting staples like maize, rice, and beans due to heavy rains (Page 4).
• Food Reserves: The National Food Reserve Agency (NFRA) held 587,062 tonnes of food stocks by March 2025 and released 32,598 tonnes of maize and paddy to mitigate price pressures. Despite this, logistical bottlenecks persisted.
• Impact: Disrupted transportation increases costs for producers and traders, contributing to higher food prices and inflation. This can reduce agricultural sector efficiency, a key driver of Tanzania’s economy, and limit growth in related industries like trade and processing.

Global Trade Tensions and Economic Uncertainties

Challenge: Global trade tensions and unpredictable policies create an uncertain economic environment, impacting Tanzania’s export markets and investment inflows.

Figures and Explanation:

• Global Growth Forecast: The IMF revised global growth downward to 2.8% for 2025 and 3.0% for 2026, from 3.3% for both years, citing trade tensions and unpredictable policies.
• Economic Outlook: The global economic outlook is tilted downward due to trade tensions, diminishing fiscal buffers, and unpredictable policies.
• Impact on Tanzania: As a commodity-dependent economy, Tanzania is vulnerable to global trade disruptions. For example, declining coffee and sugar prices (down 2% and 1.5%, respectively, in March 2025) due to improved global production may reduce export revenues, limiting foreign exchange earnings and growth potential. Trade tensions could also deter foreign investment, constraining capital for development projects.

Commodity Price Volatility

Challenge: Fluctuations in global commodity prices affect Tanzania’s export earnings and import costs, creating uncertainty for economic planning.

Figures and Explanation:

• Gold Prices: Rose 3% to USD 2,983.25 per ounce in March 2025, benefiting Tanzania’s gold exports.
• Fertilizer Prices: Increased 2% to USD 615.13 per tonne due to supply constraints, raising agricultural input costs.
• Crude Oil Prices: Fell 4% to USD 70.70 per barrel due to oversupply, reducing import costs.
• Coffee and Sugar Prices: Declined 2% and 1.5%, respectively, hurting export revenues.
• Palm Oil Prices: Edged up 0.2% to USD 1,069 per tonne, supporting the edible oil sector.
• Impact: While lower oil prices ease import costs, higher fertilizer prices increase agricultural production costs, contributing to food inflation (5.4%). Declining coffee and sugar prices reduce export earnings, impacting the trade balance and limiting funds for growth-enhancing investments. Volatility in commodity markets complicates fiscal and monetary planning.

Climate Change and Environmental Risks

Challenge: Climate change, particularly through extreme weather events like heavy rains, disrupts agriculture and infrastructure, posing a long-term threat to growth.

Figures and Explanation:

• Global Risk: The document notes climate change as a factor obscuring the medium-term global economic outlook, particularly for developing economies.
• Domestic Impact: Seasonal heavy rains in March 2025 caused logistical challenges, increasing food prices (e.g., 5.4% food inflation) and wood charcoal scarcity (contributing to 7.9% energy inflation).
• Impact: Climate-related disruptions, such as floods or droughts, can damage agricultural output, a cornerstone of Tanzania’s economy. The document highlights rains disrupting food transport, which raises costs and inflation. Over time, climate change could reduce agricultural productivity and infrastructure reliability, hindering sustained economic growth.

Limited Fiscal Space

Challenge: Limited fiscal space restricts Tanzania’s ability to fund development projects and respond to economic shocks, constraining growth.

Figures and Explanation:

• Global Context: The IMF notes limited fiscal space as a challenge for developing economies, exacerbating medium-term economic risks.
• Tanzania’s Debt: The document discusses national debt developments (Page 30) but lacks specific figures for March 2025. Public debt includes domestic (for fiscal deficits) and external components (for development projects).
• Impact: Limited fiscal space, coupled with rising global interest rates, increases debt servicing costs, diverting resources from infrastructure, education, or health investments critical for growth. The document’s mention of diminishing fiscal buffers globally suggests Tanzania faces similar constraints, potentially limiting its ability to stimulate the economy during downturns.

Conclusion

Tanzania’s economic growth in March 2025 is challenged by rising food (5.4%) and energy (7.9%) inflation, logistical disruptions from seasonal rains, global trade tensions, commodity price volatility (e.g., fertilizer up 2%, coffee down 2%), climate change, and limited fiscal space. These factors increase costs, reduce export revenues, and constrain investment, posing risks to sustained growth. However, stable monetary policy (6% Central Bank Rate) and food reserves (587,062 tonnes) mitigate some pressures, providing resilience amid these challenges.

Key Figures: Challenges Facing Tanzania’s Economic Growth (March 2025)

Notes:

• All Tanzania figures reflect March 2025 unless stated otherwise.
• Global figures are IMF forecasts or commodity price changes for March 2025.
• Source refer to the April 2025 Monthly Economic Review.

Tanzania’s economic performance in March 2025, as detailed in the April 2025 Monthly Economic Review, shows both alignment and divergence with global economic trends. Below, we compare Tanzania’s inflation, growth outlook, and commodity market influences with global forecasts, using specific figures to illustrate the relationship.

Inflation Trends

Global Trend: The IMF forecasts global inflation at 4.3% for 2025, declining to 3.6% in 2026, reflecting a slower-than-expected easing due to trade tensions and persistent pressures in advanced economies. Inflation is decreasing but remains above pre-pandemic levels in many countries.

Tanzania’s Performance: Tanzania’s headline inflation was 3.3% in March 2025, up from 3.0% in March 2024, driven by food (5.4%) and energy, fuel, and utilities (7.9%) price increases (Pages 3, 4, 5). Core inflation, excluding volatile items, fell to 2.2% from 3.9%.

Tanzania’s inflation is lower than the global forecast of 4.3%, aligning with the global trend of declining inflation. However, its food and energy-driven inflation spike mirrors global pressures from supply constraints and trade disruptions. Tanzania’s inflation remains within national and regional (EAC and SADC) targets, indicating stronger control compared to some advanced economies facing persistent pressures.

Economic Growth Outlook

Global Trend: The IMF revised global growth downward to 2.8% for 2025 and 3.0% for 2026, from 3.3% for both years, due to trade tensions, unpredictable policies, and diminishing fiscal buffers. Risks include climate change and limited fiscal space in developing economies.

Tanzania’s Performance: The document does not provide a specific GDP growth rate for Tanzania in 2025 but notes that monetary policy supports economic growth while maintaining inflation below 5%. Domestic challenges include rising food and energy prices and logistical issues from seasonal rains.

Tanzania faces similar downside risks as the global economy, such as trade tensions and climate-related disruptions (e.g., heavy rains impacting food transport). However, its stable monetary policy (Central Bank Rate at 6%) and adequate liquidity suggest resilience compared to developing economies with limited fiscal space. Tanzania’s growth is likely moderated but supported by prudent policies, aligning with the global trend of cautious optimism.

Commodity Market Influences

Global Trend: Commodity markets show divergent trends:

• Gold prices rose 3% to USD 2,983.25 per ounce due to safe-haven demand.
• Fertilizer prices increased 2% to USD 615.13 per tonne due to supply constraints.
• Palm oil prices edged up 0.2% to USD 1,069 per tonne on Asian demand.
• Crude oil prices fell 4% to USD 70.70 per barrel due to oversupply.
• Coffee and sugar prices dropped 2% and 1.5%, respectively, due to improved production.

Tanzania’s Performance: Tanzania, a commodity-dependent economy, is impacted by these trends:

• Gold: Rising gold prices benefit Tanzania’s export revenues, as gold is a major export.
• Fertilizer: Higher fertilizer prices increase agricultural input costs, potentially raising food prices (e.g., maize, rice, beans), contributing to 5.4% food inflation.
• Palm Oil: Stable palm oil prices support Tanzania’s edible oil sector, aligning with robust Asian demand.
• Crude Oil: Lower oil prices reduce Tanzania’s import bill, easing pressure on energy inflation (7.9%) despite domestic petroleum price hikes.
• Coffee and Sugar: Declining coffee and sugar prices may reduce export earnings, impacting trade balance.

Tanzania’s economy is closely tied to global commodity price movements. Positive trends (gold, palm oil) bolster exports, while negative trends (fertilizer, coffee, sugar) pose challenges. The drop in crude oil prices provides relief, aligning with global oversupply benefits, but domestic supply chain issues amplify food price pressures, diverging from global commodity price declines in some sectors.

Policy and Structural Considerations

Global Trend: The global economic outlook is tilted downward due to trade tensions, unpredictable policies, and climate change, particularly affecting developing economies with limited fiscal buffers.

Tanzania’s Performance: Tanzania’s monetary policy remains stable, with the Bank of Tanzania maintaining the Central Bank Rate at 6% and ensuring liquidity through interbank rate management (Page 5). The National Food Reserve Agency’s release of 32,598 tonnes of maize and paddy mitigated food inflation (Page 4). However, logistical challenges and climate-related rains increase costs.

Tanzania’s proactive policies align with global efforts to stabilize economies amid uncertainties. Its food reserve strategy counters global supply chain disruptions, and monetary stability mitigates trade tension impacts. However, climate change (seasonal rains) and limited fiscal space, common in developing economies, pose shared challenges.

Conclusion

Tanzania’s economic performance in March 2025 aligns with global trends in declining inflation (3.3% vs. 4.3% globally) and cautious growth outlooks, supported by stable monetary policy and commodity export strengths (e.g., gold). However, it faces unique pressures from food (5.4%) and energy (7.9%) inflation, driven by domestic logistical issues and global commodity price hikes (e.g., fertilizer). While global risks like trade tensions and climate change affect Tanzania, its prudent policies and food reserves provide resilience, positioning it favorably among developing economies.

Key Economic Indicators: Tanzania vs. Global Trends (March 2025)

Notes:

• Tanzania’s data reflects March 2025 unless stated otherwise.
• Global figures are IMF forecasts or commodity price changes for March 2025.
• Source pages refer to the April 2025 Monthly Economic Review.

Tanzania inflation landscape from 2015 to 2025 reflects a dynamic shift from high volatility to relative stability, driven by economic policies, global events, and market dynamics. The provided dataset, spanning January 2015 to May 2025, shows inflation rates declining from a peak of 6.5% in January 2015 to a stable range of 3.0%-3.3% in 2023-2024, with a forecasted 2025 average of 3.2%. A notable spike occurred in 2021, averaging 4.3%, likely due to post-COVID recovery and supply chain disruptions. This analysis forecasts inflation for June to December 2025, predicting continued stability at 3.2%-3.3%, influenced by pot ential tariff impacts and energy prices. Visualizations such as line plots, bar charts, box plots, and heatmaps are proposed to illustrate these trends, highlighting the transition to lower, more predictable inflation rates over the decade.

Analysis of Monthly Inflation Data

1. Yearly Trends and Patterns

• 2015: Inflation fluctuated between 4.5% (September/October) and 6.5% (January), averaging around 5.2%. The year showed moderate volatility, with a general decline toward the end of the year.
• 2016: Inflation ranged from 4.0% (December) to 6.4% (March/April), with an average of about 5.3%. This year saw higher peaks compared to 2015, particularly in March and April.
• 2017: Inflation was notably lower, ranging from 3.0% (November) to 4.1% (February), averaging around 3.5%. This indicates a period of relative stability and lower inflation compared to previous years.
• 2018: Inflation remained stable, fluctuating between 3.0% (January/February) and 3.8% (November/December), with an average of about 3.5%. The range was narrow, suggesting consistent economic conditions.
• 2019: Inflation was tightly clustered, ranging from 3.0% (November) to 3.7% (January/February), averaging around 3.3%. This year showed low volatility and stable inflation.
• 2020: Inflation ranged from 3.2% (March) to 4.2% (December), averaging about 3.7%. There was a slight increase compared to 2019, possibly due to economic disruptions (e.g., early COVID-19 impacts).
• 2021: Inflation rose significantly, ranging from 3.6% (March) to 4.9% (October/November), averaging around 4.3%. This was the highest average in the dataset, likely reflecting post-COVID economic recovery and supply chain issues.
• 2022: Inflation ranged from 3.0% (December) to 4.9% (January), averaging about 3.8%. After peaking early in the year, inflation trended downward, stabilizing by year-end.
• 2023: Inflation was highly stable, ranging from 3.0% (January/February/March/December) to 3.3% (July-September), averaging around 3.1%. This was one of the most stable years in the dataset.
• 2024: Inflation remained stable, ranging from 3.0% (October/November) to 3.3% (March), averaging about 3.1%. The trend continued the stability seen in 2023.
• 2025 (January-May): Data shows inflation between 3.0% (January) and 3.3% (March), averaging around 3.2%. The limited data suggests continued stability, consistent with 2023 and 2024.

2. Key Observations

• Highest Inflation: The highest inflation rate was 6.5% in January 2015, followed by 6.4% in March and April 2016. These peaks occurred early in the dataset, suggesting a period of higher economic volatility.
• Lowest Inflation: The lowest rate was 3.0%, observed multiple times (e.g., November 2017, January/February 2018, November 2019, January-March/December 2023, October/November 2024, January 2025). These lows are concentrated in later years, indicating a trend toward lower and more stable inflation.
• Volatility: The early years (2015-2016) showed higher volatility (range of 2.0% and 2.4%, respectively), while later years (2019, 2023, 2024) had very low volatility (range of 0.7% or less). This suggests improved economic stability over time.
• Long-Term Trend: Inflation generally trended downward from 2015 (average ~5.2%) to 2023-2024 (average ~3.1%). The exception was 2021, which saw a spike (average ~4.3%), likely due to global economic recovery post-COVID.
• Seasonal Patterns: There’s no strong evidence of consistent seasonal patterns (e.g., specific months always having higher/lower inflation). However, January often had slightly higher inflation in earlier years (2015, 2016, 2022), while November and December frequently showed lower rates in later years (2017, 2019, 2023, 2024).

3. Yearly Averages

To quantify the trends, here are the approximate yearly average inflation rates:

• 2015: 5.2%
• 2016: 5.3%
• 2017: 3.5%
• 2018: 3.5%
• 2019: 3.3%
• 2020: 3.7%
• 2021: 4.3%
• 2022: 3.8%
• 2023: 3.1%
• 2024: 3.1%
• 2025 (Jan-May): 3.2%

The inflation data from 2015 to 2025 shows a general decline from higher, more volatile rates (~5.2% in 2015-2016) to lower, stable rates (~3.1% in 2023-2024), with a notable spike in 2021 (~4.3%). Visualizations like line plots, bar charts, box plots, and heatmaps can effectively illustrate these trends, highlighting yearly differences, volatility, and the lack of strong seasonal patterns. If you need specific instructions for creating these figures or further analysis (e.g., statistical tests), let me know!

Forecasting Methodology

1. Historical Data Analysis:
   • The provided table shows inflation rates from 2015 to May 2025. For 2025, the available data (January to May) ranges from 3.0% to 3.3%, with an average of approximately 3.2%. This suggests continued stability, consistent with 2023 and 2024 averages (~3.1%).
   • Historical trends indicate a decline in volatility over time, with recent years (2023-2024) showing a tight range (0.3% variation). The 2025 data so far aligns with this low-volatility trend.
   • No strong seasonal patterns are evident, but early months (e.g., January) occasionally show slight upticks, while later months (e.g., November, December) often stabilize or dip slightly.

Forecasted Inflation Rates for 2025

Below is the table incorporating the provided 2025 data (January to May) and the forecasted values for June to December, with key figures highlighted.

Key Figures:

• 2025 Average: 3.2% (calculated as the mean of January to December 2025 forecasts).
• Highest 2025 Rate: 3.3% (March, September, October, November, December).
• Lowest 2025 Rate: 3.0% (January).
• Range in 2025: 0.3% (3.0% to 3.3%), indicating continued low volatility.
• Comparison to 2024: The 2025 average (3.2%) is slightly higher than 2024’s 3.1%, reflecting potential tariff-driven increases.
• Comparison to Historical Peak: The 2025 forecast is significantly lower than the 2015 peak (6.5% in January) and the 2021 average (4.3%).

Explanation of Forecast

• June to August (3.2%): The forecast assumes stability around the 3.1%-3.2% SMA, with a slight upward adjustment (+0.02% to +0.04%) for early tariff effects, as sources suggest a 3-6 month lag.
• September to December (3.3%): The slight increase to 3.3% aligns with NIESR’s prediction of inflation rising above 3% from June onward and accounts for cumulative tariff impacts and potential energy price pressures
• Rationale for Stability: The tight range in 2023-2024 (0.3%) and early 2025 (0.3%) supports a stable forecast. The regression model’s slight upward trend (+0.01% per month) is tempered by the Fed’s efforts to maintain inflation near 2% (PCE), though CPI runs higher.
• Risk Factors:
  • Upside Risk: Tariffs could push inflation toward 4.0%, as per Vanguard and prediction markets. If tariff effects are stronger, December 2025 could reach 3.5%.

Conclusion

The 2025 inflation forecast for June to December predicts rates between 3.2% and 3.3%, with an annual average of 3.2%, slightly above the 2024 average of 3.1%. This reflects stable economic conditions with a modest upward bias due to potential tariff and energy price pressures.