By Dr. Bravious Kahyoza, PhD, Senior Economist at TICGL

As Tanzania’s national debt continues to climb, there has been increasing debate about the sustainability of our borrowing practices and their potential long-term effects on the economy.

The recent figures from the Controller and Auditor General (CAG), which show a significant increase in national debt—from Sh82.25 trillion in 2022/23 to Sh97.35 trillion in 2023/24—are a cause for concern.

However, while these numbers are alarming, the debate should focus not just on the figures themselves, but on sustainable solutions that will address the challenges of financing Tanzania’s development ambitions. One such solution lies in expanding and optimizing public-private partnerships (PPPs).

As the Economist, I have long advocated for the power of strategic partnerships between the public and private sectors as a viable alternative to heavy borrowing.

While Tanzania’s debt remains manageable in comparison to some of our East African neighbors, it is essential to explore ways to reduce our reliance on borrowing, especially for large-scale infrastructure projects.

Public-private partnerships offer a way to share the financial burden and bring in private sector expertise, technology, and efficiency.

This is a path that not only reduces the strain on public finances but also spurs economic growth in a sustainable manner.

Public-Private Partnerships as a Solution

Increasing capital through well-coordinated public-private partnerships can significantly enhance Tanzania's tax capacity, as many of these projects generate revenue.

Take, for example, the Kibaha-Chalinze road project, worth US$340 million, or the US$1 billion ring road construction project currently under way.

These initiatives, which fall under the PPPC’s oversight, demonstrate the power of combining public ambition with private sector efficiency.

By leveraging private sector resources and expertise, we can achieve faster, more cost-effective project delivery and ensure that critical infrastructure is built without overburdening the national treasury.

The fundamental strength of PPPs lies in their ability to mobilize private capital for public goods. When the private sector invests in infrastructure, it helps reduce government expenditure while also improving service delivery.

Projects are completed more efficiently and in shorter timelines, and, crucially, these projects generate ongoing revenue, which in turn supports economic growth.

As we look to the future, Tanzania’s goal of growing its economy from US$85 billion to US$700 billion is ambitious. Achieving this leap requires not just strategic borrowing and taxation but, more importantly, greater involvement of the private sector.

PPPs are the way forward if we are to meet our economic aspirations without falling into the trap of unsustainable borrowing.

The Case for Local Companies in PPPs

One of the key components of a successful PPP framework is the involvement of local companies. While foreign investment is crucial, it is important to prioritize local businesses in these partnerships.

This isn’t just a matter of political favoritism; it’s an economic strategy that benefits Tanzania as a whole. When local businesses are involved, the capital invested circulates within the country, generating a multiplier effect in our economy.

Unlike foreign investors, who often repatriate a significant portion of their earnings, domestic investors reinvest their profits locally, fostering job creation, innovation, and economic resilience.

The government has taken steps to ensure that local companies are given priority in PPP projects, particularly when competing with foreign firms. According to the law, local companies are given preference during project evaluations, not just for political reasons, but because they contribute to building a sustainable economy. When the economy is strengthened by domestic partnerships, we can reduce our dependence on external borrowing and create a more self-sufficient and resilient economy.

Anti-Corruption Measures for Greater Efficiency

A key factor in the success of public-private partnerships is transparency and accountability, which are critical in ensuring that projects are delivered on time, within budget, and without corruption. The fight against corruption is crucial to enhancing efficiency within government institutions.

Recent reports by CAG Charles Kichere highlighted the staggering inefficiencies in some of Tanzania’s parastatals, with a waste of Sh371.42 billion due to poor management and corruption. These losses undermine the effectiveness of our national budget and hamper our ability to invest in critical projects.

The government’s commitment to fighting corruption and improving efficiency will save valuable resources that can be redirected toward funding development initiatives, reducing our reliance on borrowing.

By implementing robust anti-corruption measures, we can ensure that Tanzania’s resources are used more effectively, which, in turn, will increase our capacity to finance projects through public-private partnerships and domestic revenue generation

Tanzania’s national debt is a significant challenge, but it is not an insurmountable one. By tapping into the potential of public-private partnerships, we can unlock new sources of funding, bring in private sector expertise, and build a stronger, more sustainable economy.

However, this must go hand in hand with efforts to combat corruption, prioritize local participation, and ensure that projects are efficiently managed. In this way, we can reduce our reliance on borrowing, build critical infrastructure, and pave the way for a prosperous future.

Navigating Post-Election Challenges with TISEZA, TRA, PPPC, and SOE Reforms Under President Samia Suluhu Hassan's Sixth Phase

Tanzania's Sixth Phase Government, led by President Samia Suluhu Hassan following her re-election in October 2025, spans a pivotal 2025-2030 period. This aligns with the CCM's 2025-2030 manifesto, emphasizing accelerated GDP growth from 5.6% in 2025 to over 7% by 2030 through investments in agriculture (targeting 10% growth via irrigation), tourism (aiming for >10% GDP contribution), manufacturing (9% annual expansion), and mining reforms. With the population on track to reach 114 million by 2050, the focus is on creating 10 million jobs, enhancing infrastructure, and achieving a $1 trillion economy by mid-century. However, post-election unrest has introduced uncertainties, as President Samia noted in her November 18, 2025, parliamentary address, where she described the violence as having "stained" Tanzania's global image, potentially restricting access to international loans and funding. She urged a shift toward domestic resources and announced an investigation into the protests, which claimed hundreds of lives and led to curfews and arrests.

Institutions like TISEZA, TRA, PPPC, and state-owned enterprises (SOEs) are key to resilience. This research examines their roles, the economic fallout from the political "stain," and mitigation strategies.

The Political "Stain": How Post-Election Unrest Could Impact Tanzania's Economy

The 2025 election protests, marked by violence, internet shutdowns, and curfews, have disrupted Tanzania's image of stability, drawing rebukes from the African Union and international observers. President Samia highlighted risks to foreign funding, stating, "We have to look for funds internally using our God-given resources." Economic analyses indicate multifaceted impacts:

• Short-Term Disruptions: Curfews and unrest caused a 20-30% drop in tourism bookings for November-December 2025, equating to $100 million in losses, with flight suspensions affecting key sites like Kilimanjaro. Trade halted at borders like Namanga, leading to 15% export price hikes and supply chain bottlenecks, impacting agriculture (5-7% potential harvest reduction in 2026) and causing 10,000 job losses in Arusha. The Dar es Salaam Stock Exchange dropped 4.2%, with $150 million in foreign outflows, and the shilling depreciated 3% to TZS 2,750 per USD, raising import costs. Mining operations slowed, and overall Q4 2025 GDP faces a 0.5-1.0% drag.
• Long-Term Risks: FDI could decline 15-25% from baselines, dropping below $1 billion annually in pessimistic scenarios, delaying projects like the $30 billion LNG initiative and $2 billion railway extension. GDP growth might slow to 2-3% annually (pessimistic), with inflation at 6%, 10-15% SME closures, and reduced business confidence (B-READY score potentially falling to 60-63/100). Regional trade suffers, with East African companies like KCB reporting losses, and entrepreneurs remaining cautious.

These effects compound fiscal pressures, potentially increasing reliance on domestic revenue while eroding investor trust.

TISEZA: Boosting Investments Amid Uncertainty

TISEZA, launched in July 2025, registered 201 projects worth $2.54 billion in Q1 FY 2025/26, creating 20,808 jobs. Awarded the WAIPA Investment Excellence Award in October 2025, it targets $15-20 billion annual FDI by 2030, focusing on SEZs in manufacturing and agro-processing to generate 5 million jobs. To counter the "stain," TISEZA can enhance digital approvals and rural incentives, boosting exports 20% annually.

TRA: Enhancing Domestic Revenue for Stability

TRA collected TZS 32.26 trillion in 2024/25 (103% of target) and TZS 8.97 trillion in Q1 2025/26. Targeting TZS 36 trillion in 2025/26 and an 18-20% tax-to-GDP ratio by 2030, TRA's digital compliance (aiming for 95%) will fund 60% of the budget, allocating 20% to education/health and reducing loan dependency.

PPPC: Accelerating Infrastructure Through Partnerships

With 84 PPP projects as of November 2025 (worth >$12 billion), PPPC targets 50 annually, securing $15-20 billion by 2030 for transport, energy, and agriculture. This supports tourism (8 million visitors by 2030) and irrigation expansion, mitigating unrest's infrastructure delays.

SOE Corporatization: Fostering Efficiency and Sustainability

SOEs like TANESCO, TTCL, and DAWASA/DAWASCO have reduced losses 40-60% via reforms, yielding TZS 1.028 trillion dividends in 2024/25. President Samia urges subsidy elimination through corporatization—independent boards (60% external), performance pay, and hard budgets—drawing from Singapore and China models. By 2030, this could save TZS 500-700 billion annually.

Synergistic Strategies and Mitigation Measures

To address the political stain, integrate institutions: TISEZA-TRA FDI-tax links; PPPC-SOE partnerships; digital reforms for 95% efficiency.

What Should Be Done: Implement electoral reforms for transparency; launch a $36-72 million "Tanzania Forward" PR campaign; diversify with 10% mining royalties to non-extractives; offer SME incentives (TZS 50 billion funds); mitigate risks via insurance and supply diversification; seek AU/IMF support ($1-2 billion). These can restore confidence, limit FDI loss to 10%, and achieve optimistic 6-7% growth.

Conclusion

Under President Samia's Sixth Phase, TISEZA, TRA, PPPC, and corporatized SOEs can drive 7%+ GDP growth despite the political stain's risks. By scaling FDI to $100 billion cumulative, revenue to TZS 60 trillion, PPPs to $50 billion, and SOE profitability, Tanzania can create 10 million jobs and build resilience. Swift mitigations—reforms, PR, and diversification—will turn challenges into opportunities for a #FutureReadyTanzania, rebuilding global trust toward Vision 2050.

Moving forward, it is imperative that restructuring of these key institutions, particularly SOEs, be prioritized as a non-negotiable step to ensure long-term economic stability. As outlined in the TICGL research paper, SOEs like TANESCO, TTCL, and DAWASA/DAWASCO have historically drained public finances through ongoing losses and subsidy dependence, contributing to fiscal deficits. The study emphasizes that partial reforms since 2020—such as performance contracts and board restructuring—have reduced annual losses by 40-60% and achieved record dividends of TZS 1.028 trillion in 2024/25, but sustained profitability remains elusive without full corporatization.

sThis involves adopting private-sector governance models, including legal reclassification under the Companies Act, appointing at least 60% independent directors, implementing performance-based executive remuneration, and establishing a professionally managed SOE holding company. These eight policy recommendations, grounded in Agency Theory, Public Choice Theory, and successful international models (e.g., Singapore's Temasek Holdings and China's gradual reforms), are politically and practically feasible, favoring full corporatization over hybridization or privatization to transform SOEs into efficient, financially sustainable entities that positively contribute to national development goals.

However, to exit the current economic and political impasse without adversely impacting individual livelihoods or the national economy, a comprehensive, phased plan must be developed and implemented.

This plan should focus on minimizing disruptions while maximizing inclusive benefits:

1. Phased Implementation (2025-2027): Begin with pilot reforms in select SOEs (e.g., energy and telecoms), rolling out governance changes gradually to allow for adjustments. This avoids sudden shocks, as seen in past rapid privatizations that led to job losses.
2. Stakeholder Engagement and Social Safety Nets: Involve unions, employees, and communities in consultations to build buy-in. Establish retraining programs for affected workers, funded by a TZS 200-300 billion transitional fund from TRA revenues, to reskill 50,000-100,000 employees annually for emerging sectors like manufacturing and digital services. Provide severance packages and microfinance support for SMEs to cushion individual economic impacts.
3. Economic Diversification and Risk Mitigation: Integrate SOE reforms with TISEZA's FDI targets and PPPC's infrastructure projects to create alternative jobs (e.g., 2-3 million in SEZs by 2028). Diversify revenue streams by empowering SOEs to invest abroad and compete internationally, as directed by President Samia in her November 14, 2025, parliamentary address, aiming for SOEs to contribute 10% of non-tax revenue by 2030.
4. Monitoring and Evaluation Framework: Set up an independent oversight body under the Office of the Treasury Registrar (OTR) to track progress quarterly, using key performance indicators like return on assets (>5% by 2028) and subsidy reduction (zero by 2030). This ensures reforms enhance service delivery without inflating costs for citizens, maintaining affordability in utilities while boosting national fiscal space for social programs.
5. Fiscal Safeguards for the Nation: Align reforms with TRA's tax base expansion to offset any short-term revenue dips, while leveraging PPPs to share infrastructure burdens. This holistic approach, estimated to save TZS 500-700 billion annually in subsidies by 2030, will protect the national economy from further deficits and foster equitable growth, ensuring no individual or the taifa as a whole bears undue hardship.

Rescuing Tanzania's State-Owned Enterprises

Authored by Dr. Bravious Felix Kahyoza (PhD, FMVA, CP3P) and Co-Author Amran Bhuzohera, this comprehensive research presents a transformative framework for converting Tanzania's chronically loss-making state-owned enterprises (SOEs) into financially sustainable entities through strategic corporate governance reforms—demonstrating that full corporatisation offers a politically viable alternative to privatisation while unlocking billions in fiscal savings and dividend potential.

Despite Tanzania's impressive 6-7% GDP growth and a record TZS 1.028 trillion in SOE dividends for 2024/25, critical utility enterprises in energy, water, telecommunications, and transport continue hemorrhaging funds through political interference, weak board independence, and soft budget constraints—costing taxpayers nearly TZS 400 billion annually while undermining service delivery in sectors vital to poverty reduction and economic transformation.

Key Findings and Insights

• Financial crisis quantified: Service-delivery SOEs like TANESCO (energy), TTCL (telecommunications), and DAWASA/DAWASCO (water) posted cumulative losses approaching TZS 400 billion in 2022/23 despite partial reforms, with TANESCO alone requiring TZS 400 billion in government subsidies annually even after 2022's TZS 5 trillion debt-to-equity conversion.
• Partial reforms show promise: Performance contracts and limited board restructuring since 2020 reduced annual losses by 40-60% across case studies—TANESCO cut losses from TZS 450 billion (2019/20) to TZS 180 billion (2023/24), while DAWASCO improved revenue collection efficiency from 65% to 78%—yet no utility SOE achieved sustained profitability.
• Governance gaps identified: Political interference cited by 78% (22 of 28) key informants as primary barrier, with boards averaging less than 40% independent directors pre-2020 reforms, civil-service salary structures offering no profit-linked incentives, and routine bailouts creating "soft budget constraints" that eliminate performance discipline.
• International benchmarks prove feasibility: Singapore's Temasek Holdings transformed 36 subsidized state entities into a SGD 389 billion portfolio (USD 290 billion) delivering SGD 10-20 billion annual dividends through professional boards and market discipline; China's 1990s-2000s corporatisation boosted SOE productivity 30% without privatisation; New Zealand's 1980s SOE Act converted loss-makers to profitability within 5 years.
• Statistical validation: Regression analysis shows governance score improvements explain 52-58% of variance in loss reduction (R²=0.52-0.58, p<0.001), with correlation analysis revealing positive association (r=0.68-0.71, p<0.05) between corporate governance elements (independent boards, performance incentives) and financial performance—strongly supporting Hypothesis H1.
• Agency Theory confirmed: Findings validate Jensen and Meckling's (1976) predictions that separation of ownership (citizens/state) from control (politicians/managers) creates severe information asymmetry and moral hazard—managers face no personal stakes in losses while enjoying civil-service job security, perpetuating inefficiency through misaligned incentives.
• Record dividends mask utility failures: While Tanzania's SOE sector achieved historic TZS 1.028 trillion dividend contributions in 2024/25 (68% increase), gains came overwhelmingly from already-profitable financial institutions and port authorities—utility SOEs remain net fiscal drains, highlighting the uneven application of corporatisation reforms.
• Applicability strongly endorsed: Questionnaire responses from 50 managers rated private-sector governance practices highly applicable (mean scores 4.4-4.8 out of 5), with 92% of respondents viewing Singapore and China models as most transferable—emphasizing board independence and performance incentives over outright privatisation as politically feasible pathways.

Theoretical Framework: Understanding SOE Underperformance

Agency Theory Diagnosis:

The research employs Agency Theory (Jensen and Meckling, 1976) to explain chronic SOE inefficiencies through the lens of principal-agent conflicts:

Public Choice Theory Application:

Drawing on Buchanan and Tullock (1962) and Niskanen (1971), the research demonstrates how rent-seeking behavior undermines reform:

• Political Patronage: Board appointments serve vote-buying and clientelism rather than competence—TTCL's 2018 re-nationalization reversed privatization gains, resulting in TZS 27.7 billion loss by 2023/24
• Bureaucratic Self-Interest: Officials benefit from maintaining SOE status quo through employment distribution and procurement control—explaining failed DAWASA private lease (2003-2005) and resistance to hard budget constraints
• Soft Budget Constraints: Expectation of government bailouts eliminates market discipline—unlike Singapore where "no credible threat of exit" forces efficiency, Tanzania SOEs anticipate rescue packages

New Public Management (NPM) Alignment:

The framework operationalizes Hood's (1991) NPM principles of "letting managers manage" through:

• Performance-based incentives replacing input controls
• Customer orientation over bureaucratic compliance
• Results accountability instead of process adherence
• Commercial autonomy within state ownership

Financial Performance Analysis: Three Critical Case Studies

Case Study 1: TANESCO (Tanzania Electric Supply Company)

Sector: Energy | Reform Status: Partially unbundled with some private generation participation

Financial Trajectory (2019/20 - 2023/24):

Reform Impact: 2022 TZS 5 trillion debt-to-equity conversion improved solvency; board restructuring increased independent directors to 40-50%, credited with 20% efficiency gains and 15% improvement in collection rates since 2021.

Remaining Challenges: Despite 60% loss reduction, sustained profitability remains elusive due to tariff controls, delayed ministerial approvals (costing ~TZS 150 billion in investment delays per CAG 2024), and persistent political interference.

Case Study 2: TTCL (Tanzania Telecommunications Corporation)

Sector: Telecommunications | Reform Status: Corporatised 1990s, partially privatised (49% sold), government re-acquired majority

Financial Trajectory:

Governance Lesson: Temporary profitability under corporate governance (2021/22) evaporated when government re-assumed operational control for national backbone infrastructure—demonstrating fragility of reforms without sustained autonomy and illustrating Public Choice Theory's predictions about political interference.

Case Study 3: DAWASA/DAWASCO (Dar es Salaam Water and Sewerage)

Sector: Water services | Reform Status: Failed private lease (2003-2005), reverted to public corporation

Chronic Loss Pattern:

• Sustained losses averaging TZS 100-140 billion annually (2019-2024)
• Revenue collection efficiency improved from 65% (2019/20) to 78% (2023/24) through metering reforms
• Project implementation delays continue adding costs despite collection gains

Critical Insight: Failed privatization attempt (2003-2005 lease) demonstrates that corporatisation offers middle path—neither full public bureaucracy nor outright private control, addressing political sensitivities while enabling commercial discipline.

Comparative Analysis: Traditional vs. Corporate Governance Practices

Qualitative Evidence: Thematic analysis of 28 key informant interviews identified political interference as dominant theme (78% of respondents), with one TANESCO executive stating: "Board independence has helped, but ministerial approvals still delay investments by 6-12 months."

Global Success Models: Proven Corporatisation Frameworks

Singapore's Temasek Holdings: The Gold Standard

Establishment: 1974 as private company managing 36 government-linked companies (GLCs)

Governance Pillars:

• 100% state ownership but operates independently under Companies Act
• No serving politicians on board—exclusively independent global business leaders
• Market-competitive executive compensation including long-term incentive plans
• Hard budget constraints—no government debt guarantees; entities borrow on own merit
• Constitutional safeguards—past reserves require Presidential approval for drawdowns

Results:

• Portfolio value: SGD 354 million (1974) → SGD 389 billion (USD 290 billion) in 2024
• Compounded annual return: ~9% since inception, 7-8% in recent decades
• Annual dividends: SGD 10-20 billion to government without fiscal strain
• GLC competitiveness: Singapore Airlines, DBS Bank, SingTel rank among Asia's top firms

Tanzania Relevance: Demonstrates how full legal autonomy + professional boards + commercial mandates = financial sustainability within 10 years, even for strategic sectors.

China's Gradual Corporatisation (1990s-2000s)

Approach: Company Law application without privatisation; internal governance reforms

Key Mechanisms:

• Independent directors mandated on SOE boards
• Performance contracts linking management compensation to profitability
• State-owned Assets Supervision and Administration Commission (SASAC) as professional supervisor

Outcomes:

• SOE return on assets: <2% (pre-reform) → 4-6% (post-reform)
• Productivity gains: +30% through governance improvements alone
• Profitability increased significantly while maintaining state control

Tanzania Relevance: Proves corporatisation works without ownership transfer—critical for politically sensitive utilities where privatisation faces resistance.

New Zealand SOE Act (1986-1989)

Reform: Converted government departments into limited liability companies under commercial law

Requirements:

• Clear commercial mandates separate from social obligations
• Independent boards appointed through merit-based process
• Hard budget constraints with no subsidies for commercial operations
• Annual performance targets negotiated with shareholding ministers

Results: Loss-making entities turned profitable within 5 years; sustained dividend contributions to national budget

Tanzania Relevance: Legal reclassification under Companies Act 2002 could replicate results—recommended as Priority 1 in this study's policy framework.

Malaysia's Khazanah Nasional

Model: Sovereign wealth fund managing strategic GLCs including Telekom Malaysia, Tenaga Nasional

Success Factors:

• Partial stock exchange listing increased transparency
• Professional boards enforcing performance accountability
• Market discipline through investor scrutiny

Results: Transformed subsidized utilities into profitable, internationally competitive entities with market capitalizations exceeding RM 100 billion

Statistical Evidence: Governance-Performance Linkage

Regression Analysis Results:

Correlation Analysis:

• Pearson r = 0.68-0.71 (p < 0.05) between governance reforms and reduced losses
• Positive association between independent director percentage and profitability improvements

Hypothesis Validation: Statistical evidence strongly supports H1—corporate governance practices are positively and significantly associated with improved financial sustainability in Tanzania SOEs.

Eight-Point Policy Recommendation Framework

Projected Impact by 2030-2035:

• Transform loss-making utilities to cash-flow positive entities within 5-7 years
• Generate annual dividends >TZS 2 trillion by 2035 (double 2024/25 record)
• Reduce government subsidies by TZS 500+ billion annually
• Improve service delivery metrics (electricity reliability, water access, connectivity)

Implementation Challenges and Mitigation Strategies

Adaptive Management: Quarterly reviews with stakeholder forums (government, SOE boards, development partners), biannual evaluations by external experts, 2027 mid-term review adjusting targets based on early results.

Research Methodology Strengths

Mixed-Methods Design:

• Quantitative: Financial statement analysis (2015-2024) for TANESCO, TTCL, DAWASA from CAG reports; structured questionnaires (n=50 managers)
• Qualitative: Semi-structured interviews (n=28 key informants including SOE executives, Treasury officials, academics); thematic analysis using NVivo software

Case Study Selection Rationale:

• TANESCO (energy): Best performer, most reformed
• TTCL (telecommunications): Mixed outcomes, re-nationalization lessons
• DAWASA/DAWASCO (water): Failed PPP, least reformed—allows examination of different governance arrangements

Statistical Rigor: Correlation and regression analyses in SPSS/Stata; pre-post reform comparisons; saturation principles for qualitative sampling (Guest et al., 2006)

Knowledge Contribution and Future Research

Filling Literature Gaps:

1. Provides recent (2020-2025) empirical evidence from Sub-Saharan Africa, region under-represented in corporatisation studies dominated by Asian/OECD cases
2. Demonstrates corporate governance reforms generate fiscal benefits even in politically sensitive infrastructure sectors, challenging narrative that only privatisation works in Africa
3. Validates Agency Theory and Public Choice Theory in Tanzanian context through mixed-methods evidence

Future Research Directions:

• Longitudinal evaluation: Track proposed SOE Holding Company performance over 10 years post-establishment
• Comparative African study: Corporatisation vs. PPPs in utilities across Tanzania, Kenya, Uganda
• Political economy analysis: Resistance mechanisms through in-depth interviews with politicians, union leaders
• ESG integration: Environmental, social, governance dimensions of reformed SOEs; access to climate finance
• Gender and inclusivity: Impact of diversified board composition (women, youth) on decision-making quality

Conclusion: The Corporatisation Imperative

Tanzania's SOE sector stands at a decisive crossroads. While the historic TZS 1.028 trillion dividend contribution in 2024/25 demonstrates the potential of well-governed state enterprises, the continued hemorrhaging of billions in utility sectors reveals the cost of incomplete reform. This research provides evidence-based confirmation that full corporatisation—characterized by legal autonomy, board independence, performance incentives, and hard budget constraints—offers a politically viable pathway to financial sustainability without surrendering strategic assets to private control.

The Evidence is Clear:

• Partial reforms since 2020 reduced losses 40-60% in case study SOEs
• International benchmarks (Singapore, China, New Zealand) prove sustained profitability is achievable within 5-10 years under proper governance
• Statistical analysis confirms 52-58% of performance variance explained by governance quality (R²=0.52-0.58, p<0.001)
• Stakeholders overwhelmingly endorse applicability (4.4-4.8/5 ratings) of private-sector practices

The Path Forward:

Implementation of the eight-point recommendation framework—prioritizing legal reclassification, board independence mandates, and establishment of a professional SOE holding company—can transform Tanzania's loss-making utilities into dividend-generating engines of national development by 2030-2035. The alternative—maintaining

Balancing Ambition and Pragmatism in Tanzania's Inclusive Growth Agenda

Authored by Dr. Bravious Felix Kahyoza (PhD, FMVA, CP3P) and Amran Bhuzohera, this timely economic analysis examines President Samia Suluhu Hassan's November 14, 2025 Parliamentary Address launching Tanzania's 2025-2050 National Development Vision under the rallying slogan "Kazi na Utu, Tunasonga Mbele" (Work and Humanity, Moving Forward)—revealing both the transformative potential and implementation challenges of the administration's ambitious growth agenda.

With Tanzania's economy demonstrating resilient 5.6% growth in 2025 driven by record gold exports (USD 4.43 billion, +35.8% YoY) and tourism revenues (USD 3.92 billion), the President's vision targets accelerated expansion to over 7% by 2030 while creating 8.5 million jobs—a bold agendatempered by post-election violence costs (USD 200-300 million) and fiscal constraints (TZS 57 trillion budget with 15% debt servicing).

Key Economic Promises and Strategic Priorities

• Ambitious growth acceleration: Target GDP expansion from 5.6% (2025) to >7% by 2030, requiring average annual growth of 6.8%—supported by sectoral investments, resource-backed financing, and private sector mobilization aligned with IMF projections of 6% near-term growth.
• Agricultural transformation: Shift from subsistence to commercial farming under "Kilimo ni Biashara, Mkulima ni Mwekezaji" slogan, targeting 10% sector growth (from 4%) through irrigation expansion from 3.4 million to 5 million hectares, input subsidies, and value-chain integration.
• Tourism leadership: Leverage Tanzania's natural assets (Serengeti, coastal eco-tourism) to exceed 10% GDP contribution by 2030 (from 17.2% in 2025), building on strong recovery with 5.3 million visitors and positioning tourism as top foreign exchange earner.
• Manufacturing push: Accelerate industrial growth from 4.8% to 9% by 2030 through district-level parks, with flagship projects like Bagamoyo mega-park (100,000+ jobs), Kwala Industrial Park (500,000 jobs), and Buzwagi mining park (300,000 jobs).
• Infrastructure completion: Prioritize Standard Gauge Railway (SGR) extensions (Tabora-Kigoma, Tanga-Musoma), road networks, and BRT phases to reduce logistics costs 20-30% and unlock economic corridors—critical for AfCFTA integration.
• Mining sector expansion: Build on 10.1% GDP contribution by expanding exploration beyond 16% coverage, implementing critical minerals strategy (graphite, lithium), and establishing Sovereign Wealth Fund for intergenerational benefits.
• Youth empowerment centerpiece: Create dedicated Youth Ministry with TZS 200 billion initial fund for concessional loans, targeting 50% of 8.5 million jobs to address 15-26% effective youth unemployment (900,000 annual entrants vs. 50,000-60,000 formal jobs).
• Universal Health Insurance rollout: Launch UHI pilot within 100 days, integrating facilities digitally while banning body-withholding practices, alongside Muhimbili Hospital expansion (1,435 to 1,757 beds by 2030) and recruiting 5,000 health workers.

Economic Context and Performance Snapshot

The analysis situates promises against Tanzania's November 2025 economic realities:

Strengths:

• Robust baseline: 5.6% FY 2024/25 growth exceeding projections, with mining contributing 10.1% GDP (early achievement of 10% target)
• Export boom: Gold at USD 4.43 billion (+35.8% YoY) cushioning forex reserves at USD 6.5 billion; tourism surpassing gold as top earner
• Agricultural rebound: 6.8% Q3 growth despite El Niño disruptions, with 23.4% GDP contribution from sector employing 65% of workforce
• FDI momentum: Highest decade inflows at USD 1.7 billion (2025), up from USD 1.2 billion (2024), driven by mining/manufacturing

Vulnerabilities:

• Post-election instability: October 29, 2025 violence (hundreds dead, 12-hour curfew) causing USD 200-300 million economic losses and 10% FDI dip in Q3, potentially trimming 0.5-1% off growth
• Inflation pressures: October 2025 rate at 3.5% (highest since June 2023), with food prices up 7.4% from supply disruptions and commodity shocks
• Youth employment crisis: Official ILO rate at 3.5% masks reality of 15-26% effective unemployment including underemployment—critical demographic challenge
• Climate vulnerability: 2023-24 El Niño floods costing ~1% GDP (USD 500 million) in agricultural damages, with La Niña drought risks threatening 20-30% yield reductions

Feasibility Assessment:

The research employs quantitative metrics to evaluate implementation potential:

High Feasibility Elements:

• Policy continuity: Builds on Fifth Phase 80% project completion rates, with 70% of TZS 57 trillion budget allocated to infrastructure/social sectors
• Early momentum: 12,000 public sector jobs announced (Day 12)—7,000 teachers, 5,000 health workers—demonstrating rapid execution capacity
• Youth fund ROI: TZS 200 billion (0.35% of budget) targeting MSMEs (35% GDP contributors, 80% job creators) projects 15-25% annual returns, with 1:3 cost-benefit ratio potentially generating 50,000 new SMEs and 100,000 jobs by 2027

Moderate Challenges:

• Fiscal constraints: Budget covers core promises but leaves TZS 5-7 trillion gap for unbudgeted items without external borrowing
• Debt service burden: 15% of budget allocated to servicing, limiting discretionary spending despite manageable 40-45% debt-to-GDP ratio
• Implementation capacity: Historical 60-70% execution rates suggest realistic target of 70% promise delivery, with institutional delays historically slowing FDI absorption 25%

Critical Risks:

• Political reconciliation imperative: Enquiry Commission delays could prolong instability, with regional tensions disrupting East African trade (USD 100 million weekly losses during peak unrest)
• Corruption drag: 2025 Corruption Perceptions Index at 40/100 (ranking 87/180) inflates project costs 20-30%, requiring digital audit acceleration
• Skills mismatches: Only 20% youth trained for priority sectors (mining, manufacturing), with 70% VETA graduates unemployable in high-tech areas

Key Recommendations for Implementation Success

1. Accelerate Reconciliation (Critical - First 100 Days):

• Fast-track Enquiry Commission findings to address election violence, restore investor confidence, and prevent further 0.5-1% growth losses
• Launch cross-party parliamentary oversight with quarterly KPIs tracking job creation, infrastructure milestones, and budget execution

2. Bridge Skills-Jobs Gap (High Priority):

• Expand VETA-private sector partnerships (target: 50,000 apprenticeships with firms like Barrick Gold)
• Integrate STEM scholarships with sectoral needs (mining, manufacturing, digital economy)

3. Optimize Resource Mobilization (Continuous):

• Leverage resource-backed financing to cap debt below 45% GDP while attracting USD 2-3 billion annual greenfield investments
• Scale PPP funding to 60% for infrastructure (SGR, industrial parks), offloading TZS 10-15 trillion from budget

4. Strengthen Anti-Corruption Frameworks:

• Implement digital procurement covering 80% tenders by 2026, potentially saving USD 500 million annually through reduced leakages
• Enforce quarterly performance dashboards for parliamentary scrutiny

Impact Projections and Developmental Outcomes

If 70% of promises are delivered (realistic given historical benchmarks):

Short-Term (2026):

• +0.2-0.5% GDP boost from consumption effects of job creation and UHI pilot
• 10,000 new SMEs launched via youth fund disbursements (TZS 50 billion initial), offsetting election losses through localized recovery

Medium-Term (2027-2029):

• 4-5 million jobs created across sectors, reducing youth unemployment 2-3 percentage points
• Inflation stabilization below 4% through agricultural productivity gains and domestic manufacturing

Long-Term (2030):

• 1.5-2 million people lifted from poverty (reducing rate from 26% to <15%), assuming sustained 6-8% growth
• Per capita income rising to USD 1,500 (from USD 1,200), positioning Tanzania for upper-middle-income transition
• Top-50 Ease of Doing Business ranking attracting sustained FDI and anchoring Tanzania as EAC economic hub

Downside Scenarios:

• Failure to reconcile: Persistent instability could cap growth at 5.5%, limiting poverty reduction to 1 million people and stalling Vision 2050 trajectory
• Climate shocks without mitigation: Without irrigation scaling to 5 million hectares, droughts could reduce agricultural output 20-30%, undermining food security

Conclusion: Transformative Potential with Execution Imperative

President Hassan's "Kazi na Utu" agenda represents a decisive pivot toward human-centered economics, integrating microeconomic interventions (youth funds, SME support) with macroeconomic stability (debt management, inflation control). The 7/10 feasibility rating reflects strong fundamentals—policy continuity, sectoral alignment, early actions—tempered by political, fiscal, and capacity constraints.

The authors emphasize three critical success factors:

1. Political Unity: Rapid reconciliation is non-negotiable—every month of delay costs USD 25-30 million in lost economic activity and investor flight
2. Execution Excellence: Historical 60-70% delivery rates must improve to 70-80% through parliamentary oversight, digital dashboards, and PPP acceleration
3. Stakeholder Mobilization: Success requires whole-of-society approach—private sector (30% cost-sharing), civil society (transparency), and international partners (AfDB's USD 500 million green growth package)

By 2030, if reforms hold, Tanzania could achieve the "triple win" of inclusive growth (8.5 million jobs), fiscal sustainability (debt <45% GDP), and regional leadership (AfCFTA integration)—positioning the nation as a model for African agency in equitable development.

The ultimate choice is binary: "Tunasonga Mbele" (Moving Forward) through collective resolve, or risk stagnation amid unrealized potential. Parliament's oversight and citizen engagement will determine whether President Hassan's vision becomes transformative reality or unfulfilled promise.

📘 Read the Full Economic Analysis:
"Economic Analysis of President Samia Suluhu Hassan's 2025 Parliamentary Address: Balancing Ambition and Pragmatism in Tanzania's Inclusive Growth Agenda"
Authored by Dr. Bravious Felix Kahyoza (PhD, FMVA, CP3P) and Amran Bhuzohera
Published by TICGL | Tanzania Investment and Consultant Group Ltd
🌐 www.ticgl.com

Insights from Tanzania Investment and Consultant Group Ltd (TICGL)

By Amran Bhuzohera, Economist – TICGL

As Tanzania moves confidently toward its Vision 2050 goals, we stand at a defining moment in our nation’s economic journey. Across the country, the energy for progress is visible — from infrastructure expansion and industrial growth to innovations in agriculture and digital transformation. Yet, unlocking the full potential of these business and investment opportunities requires a clear understanding of our local markets, institutional frameworks, and the dynamics that drive both public and private investment.

At TICGL, this is exactly what we do.

Understanding the Market, Guiding Investment

As an Economist at TICGL, We have seen first-hand how data-driven insights can turn ambitious ideas into sustainable investments. TICGL is more than a consulting firm — we are a bridge between economic knowledge and strategic action. Our work helps investors, policymakers, and entrepreneurs navigate Tanzania’s evolving investment environment with clarity and confidence.

We combine local expertise with global standards to provide our clients with evidence-based analysis, advisory support, and market intelligence. Our mission is simple: to empower decisions that create value, jobs, and long-term growth for Tanzania.

Our Core Focus Areas

At TICGL, our services are designed to serve the entire investment ecosystem:

• Economic and Policy Research: We analyze sectors, markets, and policy trends to provide practical insights that shape investment strategies and public reforms.
• Investment Advisory and Facilitation: We help investors identify viable projects, conduct due diligence, and navigate regulatory processes to ensure smooth market entry and partnership building.
• Public–Private Partnerships (PPPs): We support government agencies, LGAs, and private sector partners in structuring, negotiating, and managing PPP projects aligned with national development priorities.
• Business Consulting and Market Support: We offer advisory services for SMEs and large investors, helping them understand taxation, compliance, and business climate challenges in Tanzania.

Introducing the Tanzania Investment Portfolio

One of our most exciting initiatives is the Tanzania Investment Portfolio (TIP) — a comprehensive compilation of both public and private investment projects, as well as PPP initiatives from across the country.

This portfolio showcases over 100 investment and business opportunities across sectors such as energy, agriculture, tourism, transport, manufacturing, mining, real estate, and technology. It highlights Tanzania’s diverse economic potential and the unique local advantages that make each project both viable and impactful.

More importantly, the TIP is built to help investors understand Tanzania from the inside out — its policies, institutions, and emerging market realities.

Why Tanzania, Why Now

Tanzania’s steady growth, political stability, and demographic momentum make it one of Africa’s most promising investment frontiers. By 2050, with a projected population of over 114 million, our domestic market will be one of the largest in the region.

At TICGL, we believe that informed investment is the key to unlocking this potential — turning opportunities into industries, and industries into livelihoods. Through our research and advisory work, we continue to connect vision with opportunity, and ideas with action.

A Call to Collaborate

We invite investors, development partners, and business leaders to engage with TICGL and explore the Tanzania Investment Portfolio. Together, we can shape an investment environment that is inclusive, data-driven, and globally competitive — one that reflects Tanzania’s growing confidence on the continental and international stage.

Connect with TICGL

📍 Head Office: Dar es Salaam, Tanzania
🌐 Website: www.ticgl.com
📧 Email: economist@ticgl.com
📞 Phone: +255 768 699 002

Economic Stability, Resilience, and Growth Momentum

By Amran Bhuzohera

Tanzania’s economy in 2025 continues to display strong resilience amid a complex post-election environment and global uncertainties. Data from the Bank of Tanzania (BoT) and National Bureau of Statistics (NBS) highlight a broadly stable macroeconomic landscape marked by low inflation, steady currency appreciation, manageable public debt, and rising foreign investment flows. The combination of policy discipline, export recovery, and domestic demand expansion positions Tanzania as one of East Africa’s most stable economies heading into 2026.

1. Inflation: Controlled and Predictable

Headline inflation remained within the 3–5% target range, rising slightly to 3.5% in October 2025 from 3.4% the previous month. The modest uptick reflects higher food prices (7.4%) partially offset by declining fuel and energy costs (–1.4% monthly).

Key takeaway: Inflation stability preserves purchasing power and encourages investor confidence. Food inflation remains a challenge, particularly for low-income households, but easing monthly trends suggest temporary relief.

2. Exchange Rate and External Sector: Strong Shilling, Narrowing Deficit

The Tanzanian shilling appreciated 9.4% year-on-year to an average of TZS 2,471.69/USD in September 2025, reversing the 10.1% depreciation of 2024. This reflects robust export performance—especially gold, cashews, and cereals—and increasing tourism earnings.

Key takeaway: Currency strength has improved debt servicing capacity and dampened imported inflation, anchoring macroeconomic stability.

3. Public Debt: Sustainable and Development-Focused

Tanzania’s total national debt stood at TZS 127.47 trillion (USD 50.77 billion) as of September 2025, with external debt accounting for 70.6%. The debt composition remains largely concessional and directed toward infrastructure, energy, and social services.

Key takeaway: Debt levels are sustainable and aligned with regional thresholds. An appreciating shilling reduces repayment costs for USD-denominated debt, though diversification of borrowing remains essential.

4. Fiscal and Monetary Position: Discipline Anchored in Stability

Fiscal operations show a TZS 618.5 billion deficit, financed mainly through domestic bonds and concessional loans. Revenue performance reached 87.2% of target while expenditure execution stood at 71.9%. The BoT policy rate remained at 6.0%, supporting 12% private sector credit growth.

Key takeaway: Fiscal discipline, supported by strong domestic debt markets, has preserved macroeconomic credibility without crowding out private credit.

5. Sectoral Outlook: Growth Catalysts Emerging

The 2025 outlook projects GDP growth between 5.5% and 6.5%, supported by agriculture, tourism, and manufacturing. Infrastructure investment and digital transformation remain key growth levers under the FYDP III framework.

Key takeaway: Structural investments in transport, power, and agriculture will sustain growth momentum into 2026, while diversification remains essential to shield against external shocks.

6. Zanzibar: Parallel Progress

Zanzibar’s economy mirrors mainland stability, posting 3.5% inflation and a USD 836.6 million current account surplus (+34.7%), driven by tourism (+28.2% arrivals). Fiscal discipline and service exports remain key strengths.

Conclusion

Tanzania’s 2025 economic story is one of stability amid transition. Inflation remains low, the shilling is strong, and debt sustainability is intact. However, persistent food inflation and USD exposure warrant close monitoring. Continued structural reforms, SME incentives, and agricultural modernization under the FYDP III will determine whether Tanzania sustains its 6%+ growth trajectory and advances toward upper-middle-income status by 2030.

Tanzania’s inflation landscape in October 2025 reflects a stable macroeconomic environment, with headline inflation rising slightly to 3.5% from 3.4% in September, supported by a moderate increase in the Consumer Price Index from 115.54 (Oct 2024) to 119.63 (Oct 2025). While most expenditure groups experienced mild price changes—such as housing (2.4%), furnishings (3.1%), and transport (1.7%)—food inflation remained the dominant driver at 7.4%, given its heavy 28.2% weight in the NCPI basket. Monthly price movements also showed easing pressures, with declines in key staples like dried beans (-3.1%), finger millet (-2.5%), and poultry (-2.7%) contributing to the overall -0.2% monthly inflation. Core inflation remained subdued at 2.1%, highlighting stable underlying price dynamics against a backdrop of steady energy costs, where fuel prices dropped between 1.6% and 1.9%. Overall, the October 2025 data paints a picture of controlled inflation, balancing modest price increases with short-term relief in essential goods.

Based on the National Bureau of Statistics (NBS) October 2025 CPI report, Tanzania recorded a headline inflation rate of 3.5%, slightly up from 3.4% in September 2025. This means prices increased modestly over the 12-month period ending October 2025.

1. Annual Inflation by Major Groups (October 2025)

The table below summarizes changes in the Consumer Price Index across main COICOP divisions.

Table 1: Annual and Monthly Inflation Rates by Main Groups (2020 = 100)

2. Headline Inflation Trend (Oct 2024 – Oct 2025)

The report shows the CPI and inflation rate moving in a narrow and stable range:

• CPI increased from 115.54 (Oct 2024) to 119.63 (Oct 2025).
• Inflation ranged between 3.0% and 3.5% over 12 months.

Inflation Trend Summary

Inflation remained stable and low, reflecting controlled price movements.

3. Food Inflation (October 2025)

Food is the largest contributor to inflation due to its heavy weight (28.2%).

Key findings:

• Food inflation rose to 7.4%, up from 7.0% in September 2025.
• Food remains the most influential driver of overall inflation.

Monthly food price changes

(notable declines contributing to total CPI decrease between Sept and Oct 2025)

4. Core Inflation (October 2025)

Core inflation excludes volatile items (unprocessed food, fuel, energy, utilities).

Key findings:

• Core inflation decreased slightly to 2.1% (from 2.2% in September 2025).
• Reflects stable prices in non-volatile goods and services.

Core vs Non-core Indices

Non-core includes food and energy — main inflation sources.

5. Goods vs Services Inflation

Goods prices rose significantly faster than services.

6. Energy, Fuel & Utilities

Energy-related prices showed moderate inflation:

• Energy, Fuel, Utilities Index increased by 4.0% year-on-year.
• Monthly prices dropped by 1.4%, mostly due to declines in:
  • petrol (-1.9%)
  • diesel (-1.6%)
  • charcoal (-2.9%)
  • kerosene (-1.8%)
  • These contributed to lower monthly inflation (-0.2%).

7. Monthly Inflation (Sept 2025 – Oct 2025)

• Monthly CPI change: -0.2%
• Driven by price decreases in several food and energy items.

This indicates short-term price relief.

Implications of October 2025 Inflation Data for the Tanzanian Economy

The October 2025 National Consumer Price Index (NCPI) report from the National Bureau of Statistics (NBS) indicates a headline inflation rate of 3.5%, a marginal uptick from 3.4% in September. This stability in low single-digit inflation reflects effective macroeconomic management amid global uncertainties, but it also highlights persistent pressures in food prices, which weigh heavily on household budgets. Below, I outline key economic implications, drawing from the NBS data and broader contextual insights from recent reports. These implications span short-term consumer impacts, monetary policy dynamics, growth prospects, and sectoral vulnerabilities.

1. Enhanced Macroeconomic Stability and Investor Confidence

• Positive Outlook: The headline inflation rate's narrow range (3.0%–3.5% over the past year) signals controlled price dynamics, aligning with Tanzania's target of keeping inflation below 5% as per the Bank of Tanzania (BoT) monetary policy framework. This stability preserves purchasing power for consumers and businesses, fostering a predictable environment for investment. For instance, the Consumer Price Index (CPI) rose modestly from 115.54 in October 2024 to 119.63 in October 2025, indicating gradual rather than erratic price growth.
• Broader Economic Tie-In: Tanzania's economy grew by an estimated 6.0% in real GDP terms for the first half of 2025, driven by agriculture, mining, and tourism sectors. Low inflation supports this trajectory by reducing input costs for exporters (e.g., gold and cashews) and attracting foreign direct investment (FDI), which reached $1.2 billion in the first nine months of 2025, up 15% year-on-year. Stable prices also aid fiscal planning, with the government maintaining a budget deficit below 4% of GDP.
• Risk: If food-driven pressures persist, it could erode confidence if not offset by wage growth, which averaged 5.2% in formal sectors during 2025.

2. Household Welfare and Poverty Alleviation Challenges

• Pressure from Food Inflation: With food and non-alcoholic beverages carrying 28.2% weight in the NCPI basket, the 7.4% annual rise (up from 7.0%) disproportionately affects low-income households, who allocate over 50% of budgets to food. Monthly declines in staples like maize grains (-1.3%), dried beans (-3.1%), and vegetables (-0.7%) provided temporary relief, contributing to the overall -0.2% monthly CPI drop. However, the non-core index (including food) at 7.3% underscores volatility tied to weather and supply chains.
• Implications for Poverty: About 26% of Tanzanians live below the poverty line (2024 data), and elevated food prices could slow progress toward the National Five-Year Development Plan's (FYDP III) goal of reducing extreme poverty to 10% by 2025. Rural households, reliant on subsistence farming, face compounded risks from climate events like El Niño-induced floods in early 2025, which disrupted harvests.
• Mitigation Potential: Government subsidies on fertilizers and imports (e.g., via the Strategic Grain Reserve) have helped cap food spikes, but expanding social protection programs—like cash transfers reaching 1.5 million beneficiaries in 2025—could buffer impacts.

3. Monetary Policy and Interest Rate Environment

• Accommodative Stance: Core inflation's dip to 2.1% (from 2.2%)—excluding volatile food and energy—suggests subdued underlying pressures, giving the BoT room to maintain its policy rate at 6.0% (unchanged since mid-2024). This supports credit growth, which expanded 12% in 2025, fueling private sector lending for SMEs.
• Energy and Transport Dynamics: The 4.0% rise in the Energy, Fuel, and Utilities Index (despite a -1.4% monthly drop from falling petrol and diesel prices) reflects global oil volatility, but local production from the Julius Nyerere Hydropower Project (operational since 2024) has stabilized electricity costs, aiding industrial competitiveness. Transport inflation at 1.7% benefits logistics for exports.
• Policy Signal: The BoT's latest Monetary Policy Statement (October 2025) emphasized vigilance on food supply shocks, potentially signaling targeted interventions like bond issuances to manage liquidity without tightening.

4. Sectoral Growth and Structural Vulnerabilities

• Agriculture and Goods vs. Services Divergence: Goods inflation at 5.0% (vs. 1.0% for services) highlights supply-side bottlenecks in agriculture, which employs 65% of the workforce and contributes 25% to GDP. The 7.4% food inflation stems partly from post-harvest losses and export competition, but services stability (e.g., education at 3.0%) supports human capital development under FYDP III.
• Opportunities in Diversification: Low overall inflation bolsters tourism (projected 8% growth in 2025) and manufacturing, with non-food items like furnishings (3.1%) showing moderate gains. However, housing inflation at 2.4% signals urban demand pressures amid rapid urbanization (4% annual rate).
• External Factors: Tanzania's shilling appreciated 2% against the USD in 2025, easing import costs for non-oil goods, but global commodity prices (e.g., wheat up 5% due to Black Sea tensions) could reignite food pressures.

Summary Table: Key Implications by Economic Dimension

In essence, the October 2025 data portrays a resilient Tanzanian economy with inflation well-managed at levels that promote inclusive growth. However, addressing food supply chain inefficiencies—through investments in irrigation and storage—remains critical to prevent inequality from widening. Looking ahead, the next NCPI release on December 8, 2025, will clarify if seasonal harvests ease pressures further. For deeper dives, refer to BoT's quarterly reports or NBS updates.

Tanzania’s food inflation remained a key economic pressure point in October 2025, rising to 7.4% year-on-year from 7.0% in September, far outpacing the headline inflation rate of 3.5%. The Food and Non-Alcoholic Beverages Index increased from 120.50 in October 2024 to 129.47 in October 2025, marking a 9-point jump over 12 months, cementing food as the primary driver due to its heavy 28.2% weight in the NCPI basket. Although several staple items recorded monthly price drops—including dried beans (-3.1%), dried peas (-3.1%), finger millet (-2.5%), poultry meat (-2.7%), and maize grains (-1.3%)—providing short-term relief and contributing to the -0.2% monthly CPI decline, elevated annual food inflation highlights persistent structural challenges. With food prices rising nearly four times higher than non-food inflation (1.9%), Tanzania’s price stability remains sensitive to supply disruptions, weather variability, and seasonal demand cycles, underscoring the urgency of strengthening agriculture systems and food supply chains.

The Food and Non-Alcoholic Beverages inflation rate for October 2025:

• 7.4% (Year-on-year)
• Up from 7.0% in September 2025
• This means prices for food items increased significantly compared to the same period last year and contributed strongly to overall headline inflation.

Food Inflation Index Movement (2024–2025)

The index increased from:

• 120.50 in October 2024
• To 129.47 in October 2025

This shows a clear 9-index-point rise over 12 months.

Table 1: Food Inflation Index Movement (2020 = 100)

Although the index dropped slightly from September to October (129.70 → 129.47), the annual rate still increased due to the comparison base from last year.

Contribution of Food to Headline Inflation

Food has the largest weight in the NCPI basket (28.2%), making it the primary inflation driver.

• Headline inflation: 3.5%
• Food inflation alone: 7.4%
• Food prices are rising more than twice the pace of average inflation.

Food Items with Significant Monthly Price Decline

Despite high annual inflation, between September and October 2025 many food items registered lower month-to-month prices, contributing to a -0.2% monthly CPI reduction.

Table 2: Declining Food Prices (Monthly Changes)

These reductions helped slow down short-term inflation pressure.

Why Food Inflation Is Rising

Key contributors based on index movement:

1. Weather-related seasonal effects – influencing cereal and vegetable prices.
2. Transport cost fluctuations – though fuel declined in October, earlier increases influenced food supply chains.
3. High demand during specific periods – food consumption patterns typically fluctuate seasonally.

Food Inflation vs Non-Food Inflation

Food inflation is nearly four times higher than non-food inflation.
This highlights the continued vulnerability of Tanzania’s price stability to food supply shocks.

Implications of October 2025 Food Inflation for the Tanzanian Economy

The October 2025 National Consumer Price Index (NCPI) from the National Bureau of Statistics (NBS) highlights food and non-alcoholic beverages inflation at 7.4%, up from 7.0% in September, with the index rising from 120.50 in October 2024 to 129.47. As the heaviest-weighted category (28.2%) in the NCPI basket, food inflation—nearly four times the 1.9% non-food rate—remains the dominant driver of the overall 3.5% headline inflation, exerting outsized pressure on economic stability. Monthly price declines in staples like dried beans (-3.1%), peas (-3.1%), and maize grains (-1.3%) offered short-term relief, contributing to a -0.2% overall CPI drop. However, structural vulnerabilities in agriculture, which employs 65% of the workforce and contributes 25-30% to GDP, amplify these trends. Below, I outline key implications, integrating NBS data with recent economic analyses.

1. Erosion of Household Purchasing Power and Widening Inequality

• Core Impact: High food inflation disproportionately burdens low-income households, who spend over 50% of budgets on food, reducing real disposable income and exacerbating food insecurity. With 26% of Tanzanians below the poverty line (2024 estimates), the 7.4% rise could push 1-2 million more into vulnerability, slowing progress toward the Third National Five-Year Development Plan (FYDP III) poverty reduction targets.
• Relief from Monthly Declines: Reductions in cereals (e.g., finger millet -2.5%) and proteins (poultry meat -2.7%) eased short-term pressures, potentially stabilizing urban food markets. Yet, annual trends signal persistent strain, as supply disruptions from upcountry regions have tripled some grocery prices in cities like Dar es Salaam.
• Broader Tie-In: This dynamic hampers consumption-driven growth, with private consumption accounting for 70% of GDP. Women and rural families, often subsistence farmers, face compounded effects, widening gender and urban-rural divides.

2. Strain on the Agriculture Sector and Rural Livelihoods

• Sectoral Vulnerabilities: Agriculture's 6.3% contribution to Q2 2025 GDP growth masks inflation's toll—rising input costs (e.g., transport, despite October's fuel dip) and weather shocks (El Niño floods in early 2025) inflate production expenses, squeezing smallholder margins. A recent study reveals agriculture's true revenue contribution is 20-25% higher than official figures, underscoring its underappreciated role, but food price volatility discourages investment in irrigation or storage.
• Export-Import Dynamics: Elevated domestic prices may boost farmer incomes short-term but risk export bans on staples like maize to curb local shortages, as seen in 2024. Cross-border trade reports highlight potential for 10-15% agri-export growth in 2025 if stabilized, yet inflation could deter regional partners like Kenya.
• Employment Risks: With 65% workforce engagement, persistent 7.4% inflation could lead to underemployment in rural areas, where post-harvest losses (up to 30%) already compound issues.

3. Moderation of Overall GDP Growth and Fiscal Pressures

• Growth Drag: Tanzania's economy is projected to expand 6% in 2025, with agriculture driving a quarter of this via better harvests. However, food inflation at twice the headline rate could shave 0.5-1% off growth by curbing domestic demand and raising fiscal costs for subsidies (e.g., fertilizer programs costing TZS 500 billion in FY2025/26).
• Inflation Spillover: The non-core index (26.1% weight, including food) at 7.3% annual rise indicates volatility spilling into energy and transport, indirectly hiking manufacturing costs. Yet, core inflation's stability at 2.1% suggests contained broader pressures, supporting 6%+ growth if food eases.
• Fiscal Implications: Government revenue from agri (e.g., cashew, tobacco) remains robust, but higher social spending on food aid could widen the budget deficit beyond 3.5% of GDP.

4. Monetary Policy and Supply-Side Responses

• BoT's Balancing Act: The Bank of Tanzania (BoT) views food inflation as transient, keeping the policy rate at 6% to support 12% credit growth for agri-SMEs. The October 2025 Monetary Policy Report notes easing food pressures in Zanzibar (to 4.0%), projecting national stability within 3-5% targets via improved supply chains.
• Policy Levers: Seasonal harvests (e.g., maize in Q4 2025) could further moderate prices, as monthly declines suggest. Initiatives like the Southern Agricultural Growth Corridor (SAGCOT) aim to boost productivity by 20% by 2026, addressing root causes like climate sensitivity.
• Risks: If global factors (e.g., Black Sea grain disruptions) persist, food inflation could exceed 8%, prompting tighter policy and higher borrowing costs.

5. External and Sustainability Factors

• Global Linkages: Tanzania's shilling stability (2% appreciation vs. USD in 2025) cushions import reliance for rice and wheat, but commodity price hikes (wheat +5% globally) fuel domestic inflation. Sustainable trends, like climate-resilient seeds adopted by 30% of farmers, offer long-term buffers.
• Opportunities: High food prices incentivize value addition (e.g., processing for export), potentially adding TZS 1 trillion to agri-GDP by 2026. Eco-friendly practices could attract green FDI, aligning with FYDP III's sustainability goals.

Summary Table: Key Implications of Food Inflation

In summary, while October's 7.4% food inflation underscores supply vulnerabilities threatening inclusive growth, monthly easing and policy buffers position Tanzania for resilience. Addressing structural issues—like 30% post-harvest losses—through FYDP III investments could cap food inflation below 6% in 2026, sustaining 6%+ GDP expansion. Monitor the December 8, 2025, NCPI release for harvest impacts. For more, see BoT's October Monetary Policy Report.

External Debt Dominates at 70.6% (Sept 2025)

As of September 2025, Tanzania’s total public debt stood at TZS 127,474.5 billion, with external debt accounting for 70.6% (TZS 90,015.4 billion) and domestic debt contributing 29.4% (TZS 37,459.1 billion), reflecting an externally oriented but development-focused financing structure. The external portfolio—converted from USD 35.4 billion using the average rate of TZS 2,471.69/USD—is primarily held by the central government (77.5%) and directed toward high-impact sectors such as transport and infrastructure (28%), social services (20.4%), and energy/minerals (14.3%). Domestic debt remains stable and locally absorbed, dominated by government bonds (73%) and supported by commercial banks (36.4%) and pension funds (23.9%), indicating a deep and liquid local market. This composition aligns with Tanzania’s growth trajectory, supporting infrastructure expansion and social investments while maintaining debt sustainability indicators within acceptable thresholds. However, the heavy exposure to USD (66% of external borrowing) presents FX risk, making shilling performance crucial for managing repayment costs. Overall, the debt structure balances development needs with macroeconomic stability, supported by an appreciating currency, strong reserves, and favorable financing terms from multilateral partners.

1. Tanzania National Debt Overview (September 2025)

Tanzania’s total public debt consists of external debt and domestic debt.

Summary Table — National Debt (TZS)

2. Debt Conversion Explanation

The external debt is originally reported in USD.
The report’s exchange rate is:

• TZS 2,471.69 per USD (September 2025 average)
• USD 35,438.2 million × 2,471.69 = TZS 90,015.4 billion

Domestic debt is already in TZS in the document:

• TZS 37,459.1 billion

3. Detailed Breakdown — External Debt (Converted to TZS)

3.1 External Debt Stock by Borrower

(All USD values from document summary)

3.2 External Debt by User of Funds (Converted to TZS)

✔ Converted using TZS 2,471.69/USD.

4. Detailed Breakdown — Domestic Debt (TZS)

4.1 Domestic Debt Structure by Creditor Category

4.2 Domestic Debt by Instrument Type

5. Combined National Debt Summary (in TZS)

6. Final Summary Table — Tanzania National Debt (TZS)

Implications of Tanzania's National Debt Structure in September 2025

The breakdown of Tanzania's national debt as of September 2025, detailed in Section 2.7 (Debt Developments) of the Bank of Tanzania's (BOT) Monthly Economic Review (October 2025), portrays a balanced yet externally oriented portfolio totaling TZS 127,474.5 billion (equivalent to ~USD 51.6 billion at TZS 2,471.69/USD). External debt dominates at 70.6% (TZS 90,015.4 billion), funding growth-critical sectors like infrastructure (28%) and social services (20.4%), while domestic debt (29.4%, TZS 37,459.1 billion) relies on stable local institutions (e.g., banks 36.4%, pensions 23.9%). This structure—converted from USD figures using the shilling's appreciated rate—reflects prudent borrowing amid 6.3% Q2 GDP growth, low 3.4% inflation, and a TZS 618.5 billion fiscal deficit (partly debt-financed). The composition supports development but amplifies FX risks, given 66% USD-denominated external exposure. Below, I analyze implications across key dimensions, integrating economic context.

1. Debt Composition: External Dominance for Growth Financing

• External Debt (70.6%, TZS 90,015.4B): Predominantly central government (77.5%, TZS 67,854.5B), with private sector (15.1%) and guarantees (7.4%) adding diversification. Usage skews toward productive investments: transport/infrastructure (28%, TZS 24,508.1B) aligns with construction's 1.1% GDP contribution, energy/minerals (14.3%, TZS 12,506.2B) supports mining growth (1.5% GDP), and agriculture/water (14%, TZS 12,280.9B) bolsters food security (NFRA stocks at 570,519 tonnes). Concessional terms (57% multilateral) keep costs low (~1.2% interest).
• Domestic Debt (29.4%, TZS 37,459.1B): Bonds dominate (73%, TZS 27,349.1B) over T-bills (27%, TZS 10,110B), with broad creditor base (other financials 39.7%) indicating deep local markets (oversubscription in securities). This reduces FX volatility spillovers.
• Broader Implications:
  • Positive: Funds 71.9% expenditure execution (TZS 3,346.6B), enabling 6% full-year GDP projection via reliable power and exports. Shilling appreciation (+9.4% y/y) lowers TZS servicing costs (~TZS 3T saved annually on USD portion), improving debt/GDP at 40.1% (below EAC 50% threshold).
  • Risks: High external share exposes to USD swings (66% currency composition), potentially inflating service (projected USD 1,215M in 2025; 4.2% of exports). If global oil rises (easing in September), import bills could pressure reserves (5.8 months cover).

2. Sustainability and Servicing Dynamics

• Borrower and Creditor Profile: Central government's 77.5% external share ensures sovereign control, with multilaterals/bilaterals as primary creditors (low-cost, long maturity ~12.8 years). Domestic's institutional holders (pensions/banks) provide stability, absorbing via oversubscribed auctions (T-bills 2.4x).
• Fund Utilization: 82.7% external to key sectors (infra/social/energy/agri) ties debt to growth multipliers, unlike "others" (14%). This supports private credit (16.1% y/y) without crowding out.
• Broader Implications:
  • Positive: Concessional bias and domestic depth sustain ratios (external service 9.8% exports, down from 11.2% 2024). Aligns with monetary policy (CBR 5.75%), keeping real yields positive (vs. 3.4% inflation) and IBCM stable (6.45%).
  • Risks: Refinancing domestic bonds/T-bills could hike yields if liquidity tightens (e.g., from revenue shortfalls like mining taxes; 87.2% collection). Cumulative growth (+1.4% MoM total debt) demands revenue diversification beyond gold/tourism.

3. Fiscal and Macroeconomic Linkages

• Budgetary Pressures: Debt finances recurrent/development gaps (TZS 2,073.7B/1,272.9B), with servicing rising as % of spend amid delays (71.9% execution). Shilling strength mitigates, but USD exposure ties to global conditions (IMF 3.2% growth).
• Inflation and Growth Ties: Low-cost external funds curb inflationary borrowing, supporting 3–5% target (food 7.0% eased by stocks;). In Zanzibar, analogous structure aids tourism/external performance.
• Broader Implications:
  • Positive: Enhances resilience (reserves USD 6.66B), fostering M3 growth (20.8% y/y) and export surplus (USD 1.0B Q2). Positive for EAC/SADC convergence.
  • Risks: FX depreciation (reversed from 2024's -10.1%) could balloon TZS costs by 10–15%, straining deficit. Commodity volatility (oil down, coffee up) affects agri/energy repayments.

4. Policy Context from the Review

• Synergies: Debt supports fiscal-monetary prudence, with BOT interventions (USD 11M net sale) buffering risks. Projections: Debt/GDP <45% by 2026, aligned with 6% growth and stable inflation.
• Outlook: Strengthen domestic market (e.g., via green bonds) and hedge FX to counter global uncertainties (trade policy index elevated).

In conclusion, Tanzania's September 2025 debt structure implies strategic financing for development amid stability, with external resources driving growth sectors and domestic buffers mitigating risks. The 70.6% external tilt underscores FX vigilance, but concessional terms and shilling strength ensure sustainability—reinforcing the Review's narrative of prudent policies for 2026 resilience.

Stability Supports Debt Sustainability (Sept 2025)

In September 2025, Tanzania’s macro-financial position showed improved resilience, with the shilling appreciating to TZS 2,471.69 per USD—up 0.75% monthly and 9.4% annually—reversing the 10.1% depreciation recorded in 2024. This stability was supported by strong foreign exchange inflows from gold, agriculture, and tourism, supplemented by improved interbank liquidity and measured BOT intervention, including a net USD 11 million sale. At the same time, the national debt rose moderately to USD 50.77 billion (+1.4% month-on-month), with external debt accounting for 69.8% (USD 35.44 billion) and domestic debt amounting to TZS 37,459 billion (around USD 15.3 billion). The debt structure remains dominated by concessional multilateral financing (57%), though commercial lenders (35.6%) and USD exposure (66% of external debt) pose vulnerability to global currency movements. The shilling’s stability is beneficial for debt management, reducing the local currency cost of servicing USD-denominated obligations, improving sustainability ratios, attracting foreign investment into government securities, and easing inflationary pressures through cheaper imports. However, continued reliance on USD-denominated debt and exposure to external shocks underscore the importance of maintaining strong revenue performance and diversifying financing sources to preserve debt resilience going forward.

1. Tanzania Shilling Stability

Exchange Rate Movements (Annual and Monthly)

• In September 2025, the Tanzanian Shilling (TZS) strengthened against the USD:
  • TZS 2,471.69 per USD
    (vs TZS 2,490.16 per USD in August 2025)
• This represents:
  • Monthly appreciation of about 0.75%
  • Annual appreciation of 9.4%
• This is a major improvement compared to:
  • 2024, when the shilling depreciated by 10.1% over the same period.

Why the Shilling Stabilized

According to the report, stability was supported by:

• Strong inflows from gold exports, agricultural exports, and tourism
• Adequate interbank foreign exchange liquidity
• BOT participation in IFEM (Bank sold USD 11 million net)
• Improved macroeconomic environment (low inflation at 3.4%)

2. National Debt Position

Total National Debt (as at September 2025)

• Total debt: USD 50,772.4 million
  (Up 1.4% from previous month)

Breakdown:

• External debt: 69.8% = USD 35,438.2 million
• Domestic debt: 30.2% = TZS 37,459 billion
  (approximately USD 15.3 billion equivalent at prevailing rates)

Monthly Growth

• External debt increased by 1.2%
• Domestic debt increased by 0.9%

Composition of External Debt

• Multilateral lenders: 57.0%
• Commercial lenders: 35.6%
• Bilateral creditors: 4.3%
• Export credit: 3.1%

Currency Composition

• USD accounts for 66% of external debt
• Euro: 17.7%
• Chinese Yuan: 6.4%

3. Relationship Between Shilling Stability and Debt

How Shilling Stability Helps Debt Position

1. Reduces cost of servicing external debt
   • With 66% of external debt denominated in USD, shilling appreciation lowers local currency cost of interest and principal repayments.
2. Improves debt sustainability ratios
   • Debt-to-GDP ratio benefits from stable exchange rate.
   • Government debt repayments (USD-denominated) become cheaper in TZS terms.
3. Improves investor confidence
   • Stable currency encourages foreign investment in government securities (bonds and T-bills).
4. Reduces inflationary pressure
   • Strengthened shilling lowers cost of imports (fuel, machinery).

However, risks remain:

• External debt remains highly exposed to USD movements (66% share)
• If USD strengthens globally, Tanzania’s debt servicing costs increase
• Continued reliance on long-term debt instruments requires strong revenue performance

Summary Table: Tanzania Shilling vs National Debt (September 2025)

Implications of Shilling Stability and National Debt Position in September 2025

The provided data on the Tanzanian shilling's appreciation and the national debt stock as of September 2025, sourced from Sections 2.5 (Financial Markets, Interbank Foreign Exchange Market) and 2.7 (Debt Developments) of the Bank of Tanzania's (BOT) Monthly Economic Review (October 2025), illustrates a reinforcing dynamic between currency resilience and fiscal sustainability. The shilling's 0.75% monthly and 9.4% annual strengthening (to TZS 2,471.69/USD) reversed 2024's 10.1% depreciation, driven by export booms (gold up 12.8% y/y, traditional crops 8.5%; Section 2.8) and tourism (earnings USD 397M in Q2), ample IFEM liquidity (USD 93.8M traded, banks 88.3% share), and BOT's net USD 11M sale. Meanwhile, total debt rose modestly to USD 50.77B (+1.4% MoM), with external comprising 69.8% (USD 35.44B, +1.2% from USD 443M disbursements > USD 131M amortization). This occurs amid 6.3% Q2 GDP growth (Section 2.1), 3.4% inflation, and a manageable fiscal deficit (TZS 618.5B). Below, TICGL detail the implications, focusing on synergies and risks.

1. Shilling Appreciation: Enhanced External Resilience and Policy Flexibility

• Monthly (0.75%) and Annual (9.4%) Gains: These reflect a current account surplus (trade balance USD 1,029M in Q2, up from USD 812M; Section 2.8), bolstered by non-gold exports (cashews/cereals) and services (tourism up 15.2% y/y). BOT's intervention smoothed volatility without eroding reserves (USD 6,657M, 5.8 months import cover), maintaining interbank stability (6.45% rate).
• Reversal from 2024 Depreciation: The turnaround signals structural improvements, like diversified inflows reducing import dependence (e.g., fuel costs down with global oil decline; Chart 1.5 and 2.2.5).
• Broader Implications:
  • Positive: Lowers imported inflation (energy at 3.7%, down from 11.5% y/y; Section 2.2), supporting 3–5% target and real GDP momentum (projected 6% for 2025). Boosts FX reserves, enabling monetary accommodation (M3 +20.8% y/y) and private credit (16.1%).
  • Risks: Potential overvaluation could pressure export competitiveness if global demand softens (e.g., protectionism risks). Sustained strength relies on commodity stability (gold up, but wheat/fertilizer down).

2. National Debt Dynamics: Moderate Expansion with Sustainable Profile

• Total Debt +1.4% to USD 50.77B: External growth (+1.2%, USD 35.44B) from concessional inflows (multilateral 57%, e.g., IMF/World Bank; Table 2.7.2) outpaced domestic (+0.9%, TZS 37,459B via bonds/T-bills). Debt/GDP held at 40.1% (down from 42.3% in 2024), below EAC 50% threshold.
• Composition Vulnerabilities: USD dominance (66%) exposes to swings, but low-cost multilateral share (57%) and long maturities (average 12.8 years) mitigate. Commercial debt (35.6%) carries higher rates (~4.5% vs. 1.2% multilateral), reflecting market access gains.
• Broader Implications:
  • Positive: Servicing costs projected at USD 1,215M for 2025 (manageable at 4.2% of exports), funding growth-enhancing projects (e.g., infrastructure in development spend TZS 1,273B). Domestic portion supports liquidity without crowding out private borrowing (lending rates stable at 15.18%).
  • Risks: Cumulative growth (external +8.2% y/y) could strain if revenues lag (87.2% target in September; Section 2.6), especially with USD exposure. Bilateral/Chinese Yuan shares (4.3%/6.4%) add geopolitical risks.

3. Interlinkages: Shilling Strength Mitigating Debt Burdens

• Debt Servicing Relief: Appreciation reduces TZS-equivalent costs for USD-denominated repayments (66% external), e.g., a 9.4% gain shaves ~TZS 3.3T off annual service (based on USD 1.2B projection). This improves sustainability (external debt service ratio 9.8% of exports, down from 11.2% in 2024).
• Investor Confidence and Financing: Stable FX encouraged oversubscription in securities (T-bills 102%, bonds 115%), easing domestic borrowing and keeping yields moderate (91-day T-bill 6.8%). Reserves buffer shocks, aligning with IMF's resilient outlook (3.2% global growth).
• Inflation and Growth Ties: Currency stability curbs import costs (fuel/machinery), complementing low inflation (3.4%) to preserve real debt burdens. In Zanzibar, similar FX dynamics support tourism debt financing.
• Broader Implications:
  • Positive: Creates fiscal space for recurrent/development spending (71.9% execution), fostering 6% growth via exports/investment. Enhances credit ratings, potentially lowering future commercial borrowing costs.
  • Risks: USD rebound (e.g., from US policy tightening) could amplify service costs by 10–15% in TZS terms. High external reliance (69.8%) demands revenue diversification beyond gold/tourism.

4. Macroeconomic and Policy Context from the Review

• Synergies: Debt-funded investments align with output drivers (agriculture/mining) and external strength (CA surplus USD 1.2B Q2). Policy mix (CBR 5.75%) ensures no inflationary debt monetization.
• Outlook: Projections: Debt/GDP <45% by 2026, inflation 3–5%, with FX interventions maintaining balance. Global risks (trade uncertainty) warrant monitoring, but reserves (5.8 months cover) provide resilience.

In conclusion, September 2025's shilling stability implies a debt-lightened fiscal posture, reducing servicing pressures and amplifying growth dividends from exports and reserves. While moderate debt expansion remains sustainable, USD exposure underscores the need for hedging and diversification to safeguard against global reversals, ensuring alignment with Tanzania's 6% growth trajectory.