Personal remittances from Tanzanians abroad play a vital role in supporting Tanzania's secondary income, with average quarterly transfers rising from around $90 million in 2013-2016 to approximately $138-$182 million in recent years. These inflows offer economic stability by providing a reliable income source that buffers families and communities against economic fluctuations. Additionally, remittances help sustain foreign exchange reserves, contributing to currency stability and offsetting trade deficits. The steady increase in remittances reflects strong diaspora ties, presenting opportunities for policy focus on optimizing remittance channels for national development.

Figures and Averages

• Quarterly remittances from individuals abroad fluctuate, with some notable examples being $90 million to $95 million per quarter on average across certain years. For instance:
  • 2013 to 2016: The average remittances per quarter hovered around $89 million to $96 million.
  • 2017 to 2020: Slight increases saw quarterly remittances averaging $91 million to $94 million.
  • 2021 to 2023: A gradual rise was observed, with quarterly values climbing closer to $138 million to $182 million.

Percentage Trends

• Growth trend: The remittances have shown a gradual increase over the years, with a growth trend of around 3-5% per annum in the recent periods, likely due to an increased number of Tanzanians abroad and enhanced mechanisms for transferring funds back home.

Observations

1. Stable inflow: Despite fluctuations in global economic conditions, personal remittances remained a stable source of secondary income for Tanzania.
2. Significant share in Secondary Income: Remittances consistently constitute a substantial portion of the secondary income in Tanzania’s current account, highlighting the importance of expatriate earnings in supporting the domestic economy​.

The data on personal transfers from individuals abroad offers several insights into Tanzania’s economic dynamics:

1. Economic Stability through Remittances: The steady flow of remittances provides a reliable source of income, bolstering Tanzania’s balance of payments. Even in fluctuating economic conditions, remittances appear resilient, offering a buffer that can help maintain household consumption, support families, and contribute to poverty reduction.
2. Role in Foreign Exchange: Remittances contribute to Tanzania’s foreign exchange reserves. As a stable inflow of foreign currency, they help ease pressure on the Tanzanian shilling, potentially contributing to exchange rate stability.
3. Support for Secondary Income: The substantial portion of secondary income attributed to remittances underscores their importance in balancing the current account. This inflow can offset trade deficits by compensating for outflows, such as imports or debt payments, through non-trade sources.
4. Reflects Diaspora Engagement: The consistent rise in remittances suggests a strong connection between the Tanzanian diaspora and their families or communities back home. This connection could be further harnessed for economic development initiatives, such as investment in small businesses, real estate, or infrastructure.
5. Potential for Policy Focus: Given the increasing trend, the government could develop policies that facilitate and maximize the impact of remittances, like reducing transfer fees, promoting financial literacy for recipients, or creating diaspora bonds to channel funds into development projects.

Overall, these remittances signify a positive, stabilizing force within Tanzania’s economy, providing a foundation for economic resilience and an opportunity for growth and policy innovation.