Author: Dr. Bravious Felix Kahyoza PhD, FMVA CP3P, Email: braviouskahyoza5@gmail.com)

An Institutional Economics Perspective

Institutional economics examines how institutions—the formal rules (laws, regulations, property rights) and informal norms (customs, traditions, social networks)—shape economic behavior, reduce transaction costs, and influence growth. Pioneered by economists like Douglass North, who described institutions as the "rules of the game" in society, this field explains why some countries prosper while others stagnate. Strong institutions lower uncertainty, encourage investment, and promote efficient resource allocation, while weak ones breed corruption, insecurity, and inefficiency.

In Tanzania, a lower-middle-income economy heavily reliant on agriculture, mining, and tourism, institutions have played a pivotal role in its economic trajectory. From post-independence socialist policies to liberalization reforms and recent resource nationalism, Tanzania offers rich examples of how institutional changes affect growth. This article explores these dynamics, drawing on real-world cases from land tenure, mining, governance, and the informal sector.

Historical Evolution of Institutions in Tanzania

Tanzania's institutional framework has evolved dramatically. After independence in 1961, President Julius Nyerere's Ujamaa (African socialism) policy emphasized collective farming and state control, nationalizing key industries and abolishing freehold land ownership. This created strong informal institutions based on communal values but weakened incentives for individual investment, contributing to economic decline by the 1980s.

In 1986, Tanzania adopted structural adjustment programs with the IMF, shifting toward market-oriented institutions: privatization, trade liberalization, and stronger property rights. Growth averaged 6-7% annually in the 2000s and 2010s. However, persistent challenges like weak enforcement and corruption highlight "institutional hiatus"—gaps between formal rules and practice. Recent studies using autoregressive distributed lag (ARDL) models show that improvements in institutional quality (e.g., rule of law, government effectiveness) significantly boost GDP growth from 1990-2021.

Land Tenure and Agricultural Productivity

Agriculture employs over 65% of Tanzanians and contributes about 30% to GDP, making land institutions critical. Under the 1999 Village Land Act, all land is publicly owned, with villages granting rights of occupancy. This system aims to protect communal customs but often creates insecurity, as titles are hard to obtain and disputes common.

Insecure property rights discourage long-term investments like irrigation or tree planting. Farmers fear eviction or loss of improvements, leading to lower productivity. For instance, in rural areas like Iringa and Mbeya, studies show that untitled land receives 20-30% less investment in soil conservation.

Positive reforms provide counter-examples. The USAID-funded Feed the Future Tanzania Land Tenure Assistance (LTA) project (2015-2023) issued over 100,000 Certificates of Customary Rights of Occupancy (CCROs) in villages. Results were striking: titled farmers invested more in perennial crops, accessed credit easier (using titles as collateral), and saw yields rise by up to 20%. In one village in Pwani Region, women with joint titles increased farm investments, reducing gender disparities rooted in customary laws favoring men. The World Bank's Tanzania Land Tenure Improvement Project further demonstrates how formalizing rights reduces conflicts and boosts economic activity.

These examples illustrate North's idea: secure property rights lower transaction costs and unlock capital, driving growth in Tanzania's largest sector.

Mining Sector Regulations and Resource Nationalism

Mining, contributing 10% to GDP and over 50% of exports (mainly gold), showcases how regulatory institutions affect foreign investment and revenue. Under President John Magufuli (2015-2021), reforms like the 2017 Mining Act amendments mandated 16% state equity in large mines, higher royalties, and local content requirements.

The Mining (Local Content) Regulations (amended in 2025) require 100% Tanzanian ownership in certain services, local banking, and insurance procurement. For example, companies like Barrick Gold renegotiated contracts, paying billions in settlements and committing to local hiring. This increased government revenue but initially deterred FDI due to perceived unpredictability.

Under President Samia Suluhu Hassan (since 2021), institutions have become more investor-friendly while retaining local benefits. The 2022 State Participation Regulations clarified equity rules, and 2025 amendments strengthened oversight. In Geita Region, small-scale miners benefiting from technical support regulations formed cooperatives, improving safety and output. However, challenges persist: artisanal miners often operate informally, evading taxes due to weak enforcement.

These cases highlight "extractive institutions" (per Acemoglu and Robinson): when rules favor elites or are inconsistently applied, they hinder inclusive growth. Better-designed institutions could balance revenue with investment.

Corruption, Governance, and Business Environment

Corruption erodes trust in institutions, raising business costs. Tanzania ranks moderately on the Corruption Perceptions Index, but petty corruption in licensing and customs is rampant. The Prevention and Combating of Corruption Bureau (PCCB) prosecutes cases, yet fear of retaliation deters reporting—over 75% of citizens hesitate to speak out.

Examples abound in public procurement. In the Stiegler's Gorge dam project (now Julius Nyerere Hydropower), allegations of inflated contracts delayed progress and raised costs. In contrast, improved governance in ports (e.g., Dar es Salaam) via digital clearance reduced bribery, cutting cargo dwell time by days and boosting trade.

Informal institutions like economy of affection (family/clan networks) sometimes enable corruption but also provide social safety nets. In urban areas, machinga (street vendors) rely on informal norms to navigate harassment, contributing to the informal economy (over 40% of GDP).

The Informal Economy and Customary Norms

Tanzania's informal sector employs most workers, especially women in cross-border trade. Informal institutions—tribal customs, trust-based lending (vikoba savings groups)—fill gaps left by formal ones. In markets like Kariakoo, vendors use social sanctions to enforce contracts without courts.

However, this duality limits scaling: informal businesses rarely access formal credit or markets. During COVID-19, informal traders suffered without social protection, highlighting weak bridging institutions.

Pathways Forward

Tanzania's experiences affirm institutional economics: quality institutions drive growth. Land titling boosts agriculture, mining reforms capture resource rents (with risks), and anti-corruption efforts build trust. Challenges like enforcement gaps and informal-formal tensions persist.

Prioritizing reforms—digital governance, inclusive land policies, transparent mining contracts—could accelerate progress. As studies show, even marginal institutional improvements yield substantial economic dividends. Tanzania's story is one of potential: strong institutions can transform its abundant resources into shared prosperity.

TICGL’s Economic Research Centre has published a discussion paper authored by Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com) and Amran Bhuzohera, exploring how Public-Private Partnerships (PPPs) contribute to Tanzania’s national development priorities, infrastructure expansion, and private-sector-led growth.

Dr. Bravious Felix Kahyoza, a certified professional in Financial Modeling & Valuation Analyst (FMVA) and Certified PPP Professional (CP3P), brings advanced expertise in project feasibility, risk management, and investment performance. His work reflects a strong commitment to evidence-based decision-making, sustainable investment, and economic transformation in Tanzania.

Amid persistent financing gaps and reduced donor aid, the study examines the institutional, regulatory, and financial structures shaping PPP performance. It provides an in-depth assessment of how effective governance, policy coherence, and financial innovation can accelerate Tanzania’s journey toward Vision 2050 and the Third National Five-Year Development Plan (FYDP III).

Drawing evidence from PPP projects across energy, transport, and social infrastructure sectors, and consultations with key institutions such as PPPC, TIC, and the Ministry of Finance, the findings reveal:

Progressive legal frameworks, yet uneven enforcement and limited project bankability.
Institutional fragmentation weakens coordination and investor confidence.
Financing constraints persist due to underdeveloped domestic capital markets.
Enhanced collaboration between public and private actors is essential to sustain impact.

Key Policy Directions

1. Strengthen institutional coordination through a unified PPP regulatory framework and clear accountability mechanisms.
2. Expand blended finance models and risk-sharing instruments to attract long-term investment.
3. Build national capacity in PPP project appraisal, negotiation, and contract management.
4. Prioritize transparency and impact assessment in project selection to ensure value-for-money outcomes.

These recommendations position PPPs as a cornerstone of Tanzania’s economic transformation, ensuring that private sector participation drives sustainable, inclusive growth across priority sectors.
📘 Read the Full Paper:
“Assessing the Effectiveness of Public-Private Partnership (PPP) Frameworks in Tanzania’s National Development Agenda”
Published by TICGL | Economic Research Centre

Author: Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P, Co-Author: Dr. Jasinta Msamula Kahyoza PhD, FMVA, CP3P

TICGL’s Economic Research Centre has published a new discussion paper authored by Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com) and Dr. Jasinta Msamula Kahyoza PhD, FMVA, CP3P (jmsamula@mzumbe.ac.tz). Both are accomplished economists and certified professionals in Financial Modeling & Valuation Analyst (FMVA) and Certified PPP Professional (CP3P). The paper examines how financial modelling enhances project feasibility, risk management, and investment performance within Tanzania’s infrastructure and SME sectors. Their work reflects a strong commitment to advancing evidence-based decision-making, sustainable investment, and economic transformation in Tanzania.

In the face of a $20 billion annual infrastructure financing gap, the study assesses how modelling tools—such as Discounted Cash Flow (DCF), Net Present Value (NPV), and Monte Carlo simulations—can drive efficiency, transparency, and private sector participation in national development.

Drawing evidence from 165 stakeholders across TANROADS, PPPC, and private contractors, and data from 50 major projects (including Bagamoyo Port and Julius Nyerere Hydropower Project), the findings show:

• Moderate adoption of financial modelling (mean index 2.84/5), with DCF/NPV used in 78% of cases, but only 32% applying Monte Carlo simulations.
• Improved performance outcomes, where modelling adoption increased on-time project completion by 8.45% and explained 52% of project performance variation (R² = 0.520).
• Energy projects demonstrated stronger adoption and results due to higher risk sensitivity and technical feasibility demands.
• Main barriers include data scarcity, inadequate training, and weak digital infrastructure for advanced simulations.

The paper emphasizes that integrated probabilistic modelling—especially Monte Carlo and real options techniques—can de-risk large public-private partnerships and enhance value-for-money outcomes.

Key Policy Directions

• Institutionalize advanced modelling tools in all PPP project appraisals exceeding $100 million.
• Build national capacity through training 500 technical experts annually in DCF, Monte Carlo, and scenario analysis.
• Introduce AI-powered risk dashboards for continuous project monitoring and predictive analysis.
• Standardize financial data reporting to attract $15 billion in foreign direct investment by 2030.

These recommendations align with the Third National Five-Year Development Plan (FYDP III), reinforcing Tanzania’s commitment to resilient, private sector–driven, and sustainable infrastructure growth.

Read the Full Paper:
“Financial Modelling for Enhanced Project Feasibility and Risk Management in Tanzania’s Infrastructure Development”
Published by TICGL | Economic Research Centre

Tanzania's food and non-alcoholic beverages inflation rose to 7.7% in August 2025, up from 7.6% in July, reflecting a year-on-year price increase in this category, which holds the largest CPI weight of 28.2%. The food index climbed from 121.12 in August 2024 to 130.48 in August 2025, though it remained nearly flat month-to-month (130.47 to 130.48), buoyed by price drops in staples like maize (-1.9%) and vegetables (-1.8%). This stability masks underlying pressures from agricultural supply challenges, impacting 25-30% of GDP and threatening household affordability, especially for the 57% of households citing food costs as a major concern in 2024.

Food and Non-Alcoholic Beverages Inflation

• Weight in CPI basket: 28.2% (largest share).
• Annual inflation (Aug 2025 vs Aug 2024): 7.7%, compared to 7.6% in July 2025.
• Index values:
  • Aug 2024: 121.12
  • July 2025: 130.47
  • Aug 2025: 130.48

This means that on average, the prices of food and non-alcoholic beverages increased by 7.7% over the year.

Food Items Driving the Change (July → August 2025)

Even though annual food inflation was high, the monthly food index was almost flat (0.0%), because prices of some items went down, offsetting increases in others.
Items that recorded price decreases include:

• Maize grains: -1.9%
• Maize flour: -0.3%
• Wheat grains: -1.1%
• Finger millet grains: -0.5%
• Fresh fish: -0.3%
• Vegetables: -1.8%
• Irish potatoes: -2.7%
• Sweet potatoes: -3.3%
• Cocoyams: -2.8%
• Dried beans: -2.5%
• Dried lentils: -4.5%
• Dried peas: -2.5%
• Cowpeas: -3.4%
• Groundnuts: -0.2%

These declines helped stabilize the monthly food inflation despite strong annual growth.

Key Insights

1. Food is the main inflation driver: At 7.7%, food inflation is more than double the headline inflation (3.4%).
2. Monthly stability: The food index hardly changed from July to August 2025 (130.47 → 130.48) due to falling prices of several staples.
3. Volatility: The year-on-year rise shows that food prices have been under upward pressure over the past 12 months, even if short-term prices softened in August.

Summary:
Food and non-alcoholic beverages in Tanzania saw 7.7% annual inflation in August 2025, driven mainly by higher year-on-year food costs. However, month-to-month food prices were stable, with declines in staple grains, vegetables, and pulses balancing out other pressures.

Table 1: Food and Non-Alcoholic Beverages Inflation Rate

*Note: July 2025 food inflation rate (7.6%) is mentioned in the text as comparison to August 2025 rate.

Table 2: Core Inflation and Other Key Indices (August 2025)

Key Highlights:

• Headline inflation increased to 3.4% in August 2025 from 3.3% in July 2025
• Food inflation rose to 7.7% in August 2025 from 7.6% in July 2025
• Core inflation increased to 2.0% in August 2025 from 1.9% in July 2025
• Monthly CPI declined by 0.1% from July to August 2025
• Food and non-alcoholic beverages have the highest weight (28.2%) in the CPI basket

Economic Implications of Food Inflation in Tanzania (August 2025)

In August 2025, Tanzania's food and non-alcoholic beverages inflation reached 7.7%, more than double the headline rate of 3.4%, driven by a year-on-year index rise from 121.12 to 130.48 despite monthly stability (0.0% change from July's 130.47). This category's dominant 28.2% CPI weight amplifies its role in eroding household purchasing power, particularly amid projections of 4.0% overall inflation and 6.0% GDP growth, highlighting vulnerabilities in agriculture and potential poverty exacerbation for low-income groups.

Impact on Households and Poverty

Food inflation disproportionately affects low-income and rural households in Tanzania, where food expenditures can exceed 50% of budgets, compared to the national CPI weight of 28.2%. The 7.7% annual rise in August 2025, up from 7.6% in July and 7.3% in June, intensifies cost-of-living pressures, potentially pushing more households into poverty. In 2024, 57% of households reported food price hikes as a major shock, contributing to intersecting crises like hunger and economic instability. Globally, a 1% food price increase can raise poverty by 0.0001% in low- to middle-income groups, a trend applicable to Tanzania where urban poverty is exacerbated by reduced welfare and access to nutritious food. However, long-term spikes may benefit net food producers, though short-term volatility from weather and supply issues hinders this for subsistence farmers.

Macroeconomic Effects

As the primary inflation driver, food prices at 7.7% in August 2025 elevate the non-core index to 7.3%, contrasting with core inflation's stability at 2.0% (excluding volatiles like unprocessed food). This contributes to headline inflation's slight rise to 3.4%, within the Bank of Tanzania's (BOT) 3-5% target, but risks broader price instability if unchecked. Agriculture, comprising 25-30% of GDP, faces disruptions from weather-induced supply shortages, amplifying import dependencies and exchange rate pressures (USD/TZS around 2,470). Despite this, Tanzania's 6.0% GDP growth projection for 2025 remains robust, supported by mining and services, though persistent food hikes could dampen consumption and widen inequality.

Agricultural Sector Challenges

Monthly price declines in staples like maize (-1.9%), vegetables (-1.8%), and tubers (e.g., sweet potatoes -3.3%) provided short-term relief in August 2025, but year-on-year pressures stem from supply disruptions, including weather events and global commodity trends (FAO index up 7.6% annually). These factors, combined with rising input costs, challenge Tanzania's food security recovery post-pandemic, where agriculture employs over 65% of the workforce. Easing global prices offer some buffer, but domestic volatility could hinder export competitiveness and stock buffers (e.g., 557k tonnes noted earlier in 2025).

Policy Responses and Outlook

BOT's cautious accommodative policy for 2025/26, maintaining low rates to anchor inflation while supporting growth, addresses food-driven pressures through liquidity management and reserves (USD 6 billion). Recommendations include agricultural subsidies and infrastructure to mitigate supply shocks. IMF projections of 4.0% inflation suggest moderation, but sustained food hikes risk derailing 6.0% growth, necessitating targeted interventions for inclusive development.

The National Consumer Price Index (NCPI) for August 2025 reveals a stable yet nuanced inflationary landscape in Tanzania, with the annual headline inflation rate rising marginally to 3.4% from 3.3% in July 2025. This slight uptick, driven predominantly by a 7.7% increase in food and non-alcoholic beverage prices, underscores the significant influence of the agricultural sector, which holds a 28.2% weight in the CPI basket. Despite a minor monthly decline in the overall index from 119.85 to 119.77, reflecting seasonal price drops in staples like maize and vegetables, core inflation remained steady at 2.0%, indicating underlying price stability. These figures highlight Tanzania's balanced economic management amid a projected 6% GDP growth, though persistent food price pressures pose challenges for household affordability and rural livelihoods.

Headline Inflation

• The annual headline inflation rate (all items in the CPI basket) stood at 3.4% in August 2025, up slightly from 3.3% in July 2025.
• This means that on average, prices of goods and services were 3.4% higher in August 2025 compared to August 2024.
• The overall index rose from 115.78 in August 2024 to 119.77 in August 2025.

Food and Non-Alcoholic Beverages

• Inflation in this category was 7.7% in August 2025, compared to 7.6% in July 2025.
• This remains the biggest driver of inflation, since food carries the largest weight (28.2%) in the basket.

Non-Food Items (Excluding Food & Beverages)

• Inflation rose slightly to 1.6% in August 2025, up from 1.5% in July 2025.

Core Inflation

• Excluding volatile items (unprocessed food, energy, and utilities), core inflation was 2.0% in August 2025, compared to 1.9% in July 2025.
• This shows relatively stable underlying price trends.

Selected Groups (Year-on-Year Changes)

• Alcoholic beverages & tobacco: 2.9%
• Clothing & footwear: 1.7%
• Housing, water, electricity, gas & fuels: 2.1%
• Transport: 1.4%
• Education services: 3.0%
• Restaurants & accommodation: 0.9%
• Insurance & financial services: 0.6%

Monthly Price Movements (July → August 2025)

The CPI slightly declined from 119.85 in July 2025 to 119.77 in August 2025 (-0.1%), due to lower prices of several items:

• Food items falling in price: maize (-1.9%), maize flour (-0.3%), fresh fish (-0.3%), vegetables (-1.8%), Irish potatoes (-2.7%), sweet potatoes (-3.3%), lentils (-4.5%), beans (-2.5%), cowpeas (-3.4%).
• Non-food items falling in price: men’s garments (-0.6%), children’s garments (-0.5%), charcoal (-0.7%), firewood (-5.5%), petrol (-0.4%).

Summary:
Tanzania’s inflation in August 2025 remained stable and moderate at 3.4%, mainly driven by food prices (7.7% increase). Core inflation (2.0%) shows underlying stability, but seasonal drops in key food and fuel items slightly reduced the monthly index.

Table 1: Tanzania Overall Inflation Rates

Table 2: Core Inflation and Other Key Indices (August 2025)

Key Highlights:

• Headline inflation increased to 3.4% in August 2025 from 3.3% in July 2025
• Food inflation rose to 7.7% in August 2025 from 7.6% in July 2025
• Core inflation increased to 2.0% in August 2025 from 1.9% in July 2025
• Monthly CPI declined by 0.1% from July to August 2025
• Food and non-alcoholic beverages have the highest weight (28.2%) in the CPI basket

Overview of Tanzania's Inflation and Economic Implications

Tanzania's headline inflation rate of 3.4% in August 2025 reflects a stable macroeconomic environment, remaining within the Bank of Tanzania's (BOT) target range of 3-5%. This moderate level, up slightly from 3.3% in July, indicates controlled price pressures overall, supported by prudent monetary policies and improved supply conditions in non-food sectors. However, the data highlights persistent challenges, particularly from food price increases, which could strain household budgets and exacerbate inequality. Drawing from the attached National Bureau of Statistics (NBS) document and recent economic analyses, this inflation profile supports robust GDP growth projections while underscoring the need for targeted interventions in agriculture and food security. Below, I break down the key economic implications.

Positive Implications for Economic Stability and Growth

• Macroeconomic Resilience and Policy Effectiveness: The low headline inflation rate aligns with BOT's cautious accommodative monetary policy for 2025/26, which aims to balance inflation control with economic expansion. In July 2025, BOT reduced its central bank rate (CBR) by 25 basis points to 5.75%, marking the fifth cut in a series to stimulate lending and investment while keeping inflation anchored. This has contributed to foreign exchange reserves reaching approximately USD 6 billion by June 2025—one of the highest levels in recent years—bolstering the Tanzanian shilling's stability (USD/TZS at around 2,470 in early August 2025). Stable inflation enhances business confidence, attracts foreign direct investment (FDI), and supports Tanzania's goal of drawing USD 15 billion in investments in 2025, focusing on manufacturing, clean energy, transport, and minerals.
• Strong GDP Growth Momentum: Tanzania's economy is projected to grow by 6.0% in 2025, up from 5.5-5.6% in 2024, driven by sectors like mining (which led Q1 2025 growth at 5.4%) and services. Low core inflation (2.0% in August, excluding volatile items) signals underlying price stability, reducing risks of overheating and allowing for sustained expansion. The IMF forecasts inflation at 4.0% for the year, complementing this growth outlook. At current prices, GDP is expected to reach USD 88 billion in 2025, positioning Tanzania as one of East Africa's fastest-growing economies.
• Benefits for Non-Food Sectors: Inflation in categories like transport (1.4%), housing and utilities (2.1%), and services (0.8%) remains subdued, aided by monthly declines in energy prices (e.g., petrol -0.4%, firewood -5.5%, charcoal -0.7%). This lowers operational costs for businesses, boosts competitiveness in exports (e.g., minerals and agriculture), and supports fiscal health. The energy, fuel, and utilities index rose only 2.6% annually, reflecting easing global commodity pressures. Overall, non-food inflation at 1.6% preserves purchasing power for middle-income groups and encourages consumer spending in durable goods.

Challenges and Risks from Food-Driven Inflation

• Impact on Cost of Living and Poverty: Food and non-alcoholic beverages, weighted at 28.2% in the CPI basket, saw inflation rise to 7.7% in August from 7.6% in July, making it the primary inflation driver. This erodes real incomes, particularly for rural and low-income households where food constitutes over 50% of expenditures. Despite a monthly CPI decline of 0.1% due to seasonal drops in items like maize (-1.9%), vegetables (-1.8%), and tubers (e.g., sweet potatoes -3.3%), year-on-year food price hikes could push more people into poverty if not addressed. For context, food inflation surged from 1.4% in March 2024 to 5.4% in March 2025, driven by weather disruptions and supply chain issues. This threatens post-pandemic food security recovery, as global food prices (per FAO index) are 7.6% higher than last year.
• Broader Economic Vulnerabilities: High non-core inflation (7.3%, including volatile foods) could amplify external shocks, such as global commodity volatility or climate events affecting agriculture (which anchors 25-30% of GDP). If food prices continue rising, it might fuel wage demands, potentially spiraling into broader inflation. Additionally, the goods index (4.9% inflation) reflects import dependencies, which could worsen with shilling fluctuations.
• Inequality and Social Implications: Urban-rural divides may widen, as food inflation hits subsistence farmers hardest. While core stability benefits formal sectors, informal workers (over 80% of employment) face reduced affordability, potentially slowing consumption-led growth.

Policy Responses and Future Outlook

BOT's strategy emphasizes inflation targeting while supporting 6%+ growth, with tools like reserve requirements and open market operations to manage liquidity. Fiscal measures, including subsidies for agriculture and infrastructure investments, could mitigate food risks. The IMF's 2025 Article IV consultation notes improving conditions under prudent management, with growth expected to average 6% long-term. East Africa's regional outlook projects easing inflation (from 20.8% in 2024 to 19.1% in 2025), but Tanzania's lower rate positions it favorably.

In summary, August 2025's inflation data underscores Tanzania's resilient economy, with low overall rates fostering investment and growth amid a projected 6% GDP expansion. However, elevated food inflation poses risks to inclusive development, necessitating enhanced agricultural productivity and social safety nets for sustained stability.

The financial sector in Tanzania demonstrated significant growth in Q1 2025, as outlined in the National Bureau of Statistics report, with bank deposits rising by 18.5% to TZS 43.0 trillion from TZS 36.3 trillion in Q1 2024, reflecting enhanced savings and trust in the banking system, as noted in Figure 8. This surge, coupled with a 14.7% increase in bank loans to TZS 39.1 trillion from TZS 34.1 trillion, indicates a robust expansion in credit availability, supporting investment and consumption across key sectors like manufacturing and mining, which contributed 10.4% and 15.4% to GDP growth respectively. However, the loan-to-deposit ratio declined from 94.0% to 90.9% (-3.1 percentage points), suggesting a more cautious lending approach, potentially strengthening financial stability but possibly limiting credit flow to the private sector, as highlighted in the sector’s 15.4% growth rate and 3.5% GDP share. This cautious stance, amid a stable 5.4% GDP growth (up from 5.2% in Q1 2024 per Figure 3), positions the sector to bolster economic resilience, though it may necessitate targeted policies to ensure broader credit access, especially for SMEs, to sustain long-term growth momentum.

1. Financial Sector (TZS Trillion)

• Bank Deposits:
  • Rose from TZS 36.3 trillion (Q1 2024) to TZS 43.0 trillion (Q1 2025).
  • This is an 18.5% increase, reflecting stronger household and corporate savings.
  • Suggests financial deepening, improved trust in the banking system, and rising liquidity.
• Bank Loans:
  • Increased from TZS 34.1 trillion to TZS 39.1 trillion (+14.7%).
  • Indicates expansion in credit to businesses and households, supporting investment and consumption.
• Loan-to-Deposit Ratio:
  • Fell from 94.0% to 90.9% (-3.1 percentage points).
  • Implies that while deposits surged, lending grew slightly slower, showing more conservative lending or stricter credit assessments.
  • This can strengthen financial stability but may also slow private sector financing.

The banking system shows healthy growth in deposits and loans, but lending is becoming more cautious relative to deposits.

1. Implications of Bank Deposits Growth (18.5% to TZS 43.0 Trillion)

The 18.5% surge in bank deposits from TZS 36.3 trillion in Q1 2024 to TZS 43.0 trillion in Q1 2025 signals robust financial deepening and increased public confidence in the banking system, driven by rising household savings amid stable inflation (around 3.2% year-on-year in April 2025) and economic recovery. This liquidity boost enhances banks' capacity to fund economic activities, contributing to the financial sector's 15.4% growth rate and 12.0% share of overall GDP expansion in Q1 2025. Economically, it supports monetary policy transmission, as noted in the Bank of Tanzania's (BOT) April 2025 Monetary Policy Report, where money supply (M3) grew by 15.1%, fostering a stable environment for investment and potentially lowering borrowing costs if channeled effectively. However, uneven distribution— with personal and corporate savings concentrated in urban areas—could exacerbate regional inequalities, limiting inclusive growth in rural economies reliant on agriculture.

2. Implications of Bank Loans Expansion (14.7% to TZS 39.1 Trillion)

The 14.7% increase in bank loans to TZS 39.1 trillion from TZS 34.1 trillion indicates expanding credit access for businesses and households, bolstering investment in key sectors like manufacturing (7.2% growth) and mining (16.6% growth), which together drove much of Tanzania's 5.4% GDP rise. This credit growth, estimated at 13.2% for private sector lending in Q1 2025 per investor briefings, aligns with high demand for capital projects and consumption, potentially accelerating job creation and productivity. According to the IMF's June 2025 Staff Report, the banking sector's profitability and adequate capitalization (with non-performing loans at 3.6%, below the 5% threshold) underpin this expansion, reducing systemic risks and supporting fiscal stability. Yet, slower loan growth relative to deposits may signal selective lending, prioritizing high-return sectors and possibly constraining SMEs, which could hinder broader diversification away from resource dependence.

3. Implications of Loan-to-Deposit Ratio Decline (to 90.9%)

The drop in the loan-to-deposit ratio (LDR) from 94.0% to 90.9% (-3.1 percentage points) reflects a more conservative banking approach, where deposit inflows outpaced lending, possibly due to stricter credit assessments amid regulatory emphasis on stability post-2024 reforms. This prudence strengthens financial resilience, as highlighted in Fitch Solutions' 2025 analysis, by building buffers against shocks like global trade tensions, and maintains liquidity ratios above BOT thresholds, contributing to the sector's sound profile. Positively, it mitigates risks of over-leveraging, with personal loans comprising 37.6% of credit in early 2025, but it could slow private sector financing, particularly for infrastructure and agriculture, potentially capping GDP growth below the 6% target for FY 2025/26. In a subdued economic context, as per NCBA Group's Q1 2025 report, this caution might preserve stability but delay stimulus effects from monetary easing.

Key Takeaways and Broader Economic Implications

Tanzania's financial sector in Q1 2025 demonstrates healthy expansion, with deposits and loans fueling liquidity and credit for growth, yet the lower LDR underscores a shift toward stability over aggressive expansion, aligning with BOT's neutral monetary stance. This balance supports Tanzania's resilient 5.4% GDP trajectory amid Sub-Saharan Africa's projected 3.8% growth, attracting FDI (e.g., in banking via digital lending platforms like Weza and Mgodi, disbursing billions in Q1). However, challenges include potential credit gaps for underserved sectors, which could widen inequality if not addressed through inclusive policies like mobile money integration. Overall, a stable sector positions Tanzania for sustainable development, with projections for 13-15% credit growth in 2025, but requires vigilant oversight to avoid liquidity risks in a volatile global environment.

The United Republic of Tanzania's economic performance in the first quarter of 2025 is highlighted in the National Bureau of Statistics report, showcasing a GDP growth rate of 5.4%, a slight increase from 5.2% in Q1 2024, reflecting stability and resilience. This growth, detailed at current prices of TZS 54.2 trillion (up 8.8% from TZS 49.8 trillion) and constant 2015 prices of TZS 40.7 trillion (up 5.4% from TZS 38.6 trillion), underscores a balanced expansion driven by sectors like mining (16.6% growth), electricity (19.0%), and finance (15.4%). Regionally, Tanzania leads the SADC with a 5.4% growth rate, outperforming South Africa (0.8%), Namibia (2.7%), and Botswana (-0.1%), while ranking third in the EAC behind Uganda (8.6%) and Rwanda (7.8%), demonstrating its consistent yet competitive standing.

1. GDP Growth Rate

• Tanzania:
  • 5.4% growth in Q1 2025, up slightly from 5.2% in Q1 2024.
  • This modest increase (+0.2 percentage points) shows stability and resilience, especially compared to regional peers.
• Regional Context:
  • SADC: Tanzania outperformed all selected SADC countries:
    • South Africa: only 0.8%, despite slight recovery from 0.5%.
    • Namibia: growth fell sharply to 2.7% from 4.8%.
    • Botswana: remained negative (-0.1%), though improving from -1.9%.
  • EAC: Tanzania ranked 3rd:
    • Uganda: fastest, at 8.6%, up from 7.1%.
    • Rwanda: slowed from 9.7% to 7.8%, but still strong.

Insight: Tanzania’s growth may look modest next to Uganda and Rwanda but is the most consistent, without sharp volatility.

2. GDP at Current Prices

• Q1 2025 GDP at current prices: TZS 54.2 trillion, compared to TZS 49.8 trillion in Q1 2024.
• That’s an 8.8% nominal increase (reflecting both price changes and output growth).

3. GDP at Constant 2015 Prices (Real GDP)

• Real GDP (inflation-adjusted): TZS 40.7 trillion in Q1 2025, up from TZS 38.6 trillion in Q1 2024.
• This reflects the 5.4% actual growth in economic output.

4. Comparative Highlights

• East African Community (EAC):
  • Tanzania: 5.4% (stable, 3rd place).
  • Uganda: 8.6% (leading, driven by strong agriculture and industry).
  • Rwanda: 7.8% (still higher than Tanzania, but slowed from 9.7%).
• Southern African Development Community (SADC):
  • Tanzania: 5.4% (highest among reported peers).
  • South Africa: 0.8% (struggling with structural issues).
  • Namibia: 2.7% (sharp decline, down from 4.8%).
  • Botswana: -0.1% (still contracting, though improving).

Insight: Tanzania is emerging as a regional leader in stable growth — ahead in SADC, but slightly behind the fastest-growing EAC peers.

5. Key Takeaways

1. Tanzania’s economy is expanding steadily: 5.4% real growth, supported by strong mining (+16.6%), electricity (+19.0%), and financial services (+15.4%).
2. Regional standing:
   • Leader in SADC.
   • Middle performer in EAC, behind Uganda and Rwanda.
3. Resilience: Tanzania avoided volatility seen in Rwanda (decline) and Namibia (slowdown), showing a balanced, sustainable path.

Table 2: Key Economic Indicators and Regional Comparison

1. Implications of GDP Growth Rate (5.4% in Q1 2025)

Tanzania's Q1 2025 GDP growth of 5.4%, a modest uptick from 5.2% in Q1 2024, underscores economic resilience in a challenging global environment marked by trade tensions and a projected worldwide slowdown to 2.8%. This stability, without sharp volatility, suggests effective policy interventions, including investments in infrastructure like the Julius Nyerere Hydropower Dam, which boosted electricity growth to 19.0%. However, the rate lags behind pre-pandemic highs, implying potential vulnerabilities to external shocks such as commodity price fluctuations affecting mining (16.6% growth). Positively, it supports poverty reduction and job creation, with per capita income rising, but sustained growth above 6% is needed to meet long-term goals like a USD 1 trillion economy by 2050.

2. Implications of GDP at Current Prices (TZS 54.2 Trillion)

The 8.8% nominal GDP increase to TZS 54.2 trillion from TZS 49.8 trillion reflects both real output growth and moderate inflation (implicitly around 3.4%, derived from nominal minus real growth). This indicates controlled price pressures, aligning with national targets and regional benchmarks in the EAC and SADC. Economically, it enhances fiscal space for government spending on social services and infrastructure, potentially reducing debt burdens if revenues rise accordingly. However, if inflation accelerates due to global factors like energy costs, it could erode purchasing power, particularly for low-income households reliant on agriculture.

3. Implications of Real GDP at Constant 2015 Prices (TZS 40.7 Trillion)

The inflation-adjusted rise to TZS 40.7 trillion from TZS 38.6 trillion highlights genuine productivity gains, driven by sectors like finance (15.4% growth) and manufacturing (7.2%). This fosters investor confidence, as evidenced by projections of 5.5-6% growth for 2025 overall. Implications include improved living standards and reduced inequality if distributed equitably, but over-reliance on resource-based sectors (e.g., mining) risks "Dutch disease," where currency appreciation hampers non-mining exports. Long-term, it positions Tanzania for middle-income status, though human capital investments in education (8.6% growth) are crucial.

4. Implications of Comparative Highlights

In the EAC, Tanzania's 5.4% growth ranks third behind Uganda (8.6%) and Rwanda (7.8%), signaling competitive pressures but also opportunities for intra-regional trade, where EAC integration boosts exports by over 25%. In SADC, outperforming South Africa (0.8%), Namibia (2.7%), and Botswana (-0.1%) establishes Tanzania as a regional leader, potentially attracting FDI and aiding SADC's 4.1% projected growth for 2025. Dual membership in EAC and SADC enhances market access but poses challenges like overlapping regulations; studies show Tanzania's trade intensity is higher with EAC, suggesting prioritization for efficiency. Overall, this positioning strengthens geopolitical influence, with citizens viewing both blocs positively for economic benefits.

5. Key Takeaways and Broader Implications

Tanzania's steady expansion, supported by mining, electricity, and financial services, signals a balanced path amid global uncertainties, outperforming advanced economies like the US (1.4% projected) and EU (~1-2%). As a SADC leader and EAC mid-performer, it benefits from regional integration, but volatility in peers like Rwanda's slowdown highlights the need for diversification. Risks include geopolitical tensions affecting trade, while opportunities lie in climate-resilient reforms and private sector boosts to reach 5.9% growth in 2025/26. Policy focus on agriculture and industry could sustain momentum, fostering inclusive development.

The United Republic of Tanzania's economy showcased a steady performance in the first quarter of 2025, with GDP growth rising to 5.4% from 5.2% in the same period of 2024, as detailed in the National Bureau of Statistics report. Key insights reveal the top contributors to this growth include Mining & Quarrying (15.4%), Agriculture (14.2%), Finance & Insurance (12.0%), Construction (11.3%), Manufacturing (10.4%), and Transport & Storage (9.3%). The strongest growth rates were observed in Electricity (19.0%), Mining (16.6%), Finance & Insurance (15.4%), and Education (8.6%), highlighting robust sectoral advancements. However, weaker performers such as Construction (slowed to 4.3%), Trade (fell to 3.5%), and Information & Communication (halved from 14.6% to 7.8%) indicate areas needing attention to sustain overall economic momentum.

1. Overall GDP

• Growth: Q1 2025 GDP grew by 5.4%, slightly higher than 5.2% in Q1 2024.
• Size: At constant 2015 prices, GDP rose to TZS 40.7 trillion from TZS 38.6 trillion in Q1 2024.

2. Primary Activities (40.7% of GDP)

• Agriculture, Forestry & Fishing:
  • Growth improved from 2.5% (2024) to 3.0% (2025).
  • Key drivers:
    • Paddy production rose by 9.6% (568.9k tons → 623.3k tons).
    • Wheat output jumped 29.4% (29.6k → 38.3k tons).
    • Oil seeds +5.5%, beans +0.9%.
  • Contribution: 14.2% of total GDP growth.
  • Share in GDP: 27.2%.
• Mining & Quarrying:
  • Explosive growth: 3.5% (2024) → 16.6% (2025).
  • Production surged in key minerals:
    • Gold +16.1% (13,610 kg → 15,797 kg).
    • Coal +19.1% (745k tons → 888k tons).
    • Mica +475.6%, Iron ore +256%, Phosphate +465%.
  • Contribution: largest, at 15.4% of total GDP growth.
  • Share in GDP: 11.0%.

3. Secondary Activities (21.4% of GDP)

• Manufacturing:
  • Growth: 5.8% → 7.2%.
  • Supported by increased production of consumer and industrial goods.
  • Contribution: 10.4% of growth.
  • Share in GDP: 6.8%.
• Electricity:
  • Massive jump: 7.6% → 19.0%.
  • Boosted by Julius Nyerere Hydropower Dam coming online.
  • Share in GDP: 0.2% (small, but impactful growth driver).
• Water Supply:
  • Growth: 3.1% → 4.2%, linked to production rising to 98.9m m³ (from 94.7m).
  • Share in GDP: 0.4%.
• Construction:
  • Slowed: 6.4% → 4.3%.
  • Still important with 11.3% contribution to GDP growth.
  • Supported by cement & iron-steel output.
  • Share in GDP: 12.7%.

4. Tertiary Activities (37.9% of GDP)

• Trade & Repair:
  • Decline in growth: 5.3% → 3.5%.
  • Impacted by moderate import and agriculture trade flows.
  • Share in GDP: 8.4%.
• Transport & Storage:
  • Growth: 5.7% → 6.5%, driven by cargo tonnage and SGR rail services.
  • Contribution: 9.3% of GDP growth.
  • Share in GDP: 7.2%.
• Financial & Insurance:
  • Growth: 14.9% → 15.4%.
  • Supported by:
    • Deposits up 18.5% (TZS 36.3T → 43.0T).
    • Loans up 14.7% (TZS 34.1T → 39.1T).
  • Contribution: 12.0%.
  • Share in GDP: 3.5%.
• Information & Communication:
  • Slowed sharply: 14.6% → 7.8%.
  • Still supported by mobile money, internet expansion & broadcasting.
  • Share in GDP: 1.6%.
• Education:
  • Growth: 5.5% → 8.6%, thanks to rising student enrollments.
  • Share in GDP: 2.2%.

Table 1: Sectoral Growth Performance and Contribution Analysis

The economic implications of Tanzania's sectoral growth and contributions in Q1 2025 are multifaceted, reflecting both strengths and challenges:

Tanzania's Q1 2025 GDP growth of 5.4% at constant 2015 prices, rising from TZS 38.6 trillion in Q1 2024 to TZS 40.7 trillion, signals a resilient and accelerating economy amid a global slowdown. This performance outpaces the revised global projection of 2.8% for 2025, influenced by U.S. tariff policies and trade tensions, as well as Sub-Saharan Africa's expected 3.8% growth. It also exceeds regional peers in the SADC (e.g., South Africa's 0.8%, Namibia's 2.7%) and aligns with strong EAC growth (Uganda at 8.6%, Rwanda at 7.8%). This implies sustained macroeconomic stability, potentially boosting investor confidence and supporting Tanzania's ambition to reach a USD 1 trillion economy by 2050 through structural reforms. However, reliance on public sector-driven growth could strain fiscal balances if external shocks like commodity price volatility or climate events intensify.

The growth trajectory suggests potential for full-year 2025 GDP expansion of 5.8-6.0%, driven by infrastructure and sectoral diversification, but it highlights vulnerabilities: inflation risks from rising energy and food costs, and the need for private sector-led reforms to enhance job creation, as agriculture employs 65% of the workforce yet grows modestly. Positive spillovers include improved foreign exchange reserves from mining exports and reduced energy imports due to hydropower advancements, potentially stabilizing the Tanzanian shilling.

Primary Sector Implications (40.7% of GDP)

Agriculture, Forestry & Fishing (27.2% share, 3.0% growth, 14.2% contribution): The sector's uptick from 2.5% in Q1 2024, fueled by paddy (+9.6% to 623.3k tons) and wheat (+29.4% to 38.3k tons), implies enhanced food security and rural income growth, supporting poverty reduction in a sector employing most Tanzanians. However, modest overall growth underscores challenges like weather dependency and low productivity, potentially exacerbating inequality if not addressed through investments in irrigation and value chains. Positive linkages to manufacturing (e.g., agro-processing) could amplify multiplier effects, but slower trade flows might limit export gains.

Mining & Quarrying (11.0% share, 16.6% growth, 15.4% contribution): Explosive growth from gold (+16.1% to 15,797 kg), coal (+19.1% to 888k tons), and surges in mica (+475.6%), iron ore (+256%), and phosphate (+465%) positions mining as the top growth driver, boosting export revenues (gold alone accounts for ~50% of non-traditional exports) and government royalties. Implications include stronger fiscal space for infrastructure, but risks of Dutch disease—where resource booms crowd out other sectors—and environmental concerns from expanded operations. This could attract FDI but heighten volatility tied to global commodity prices.

Secondary Sector Implications (21.4% of GDP)

Manufacturing (6.8% share, 7.2% growth, 10.4% contribution): Acceleration from 5.8% reflects increased production of consumer and industrial goods, signaling progress in industrialization under Tanzania's FYDP III. This implies job creation in urban areas and reduced import dependence, with linkages to agriculture (e.g., food processing) and mining (e.g., metal fabrication). However, energy-intensive industries benefit from electricity growth, potentially lowering costs and enhancing competitiveness.

Electricity (0.2% share, 19.0% growth): The massive jump, driven by the Julius Nyerere Hydropower Dam's commissioning, enhances energy security, reduces reliance on costly imports, and supports industrial expansion. Implications include lower electricity tariffs (potentially curbing inflation), improved manufacturing productivity, and export potential via regional grids, but risks from hydrological variability due to climate change.

Water Supply (0.4% share, 4.2% growth): Tied to production rising to 98.9 million m³, this suggests better urban access, aiding health and sanitation. Broader implications: Supports agriculture and manufacturing, but urban-rural disparities could persist without expanded infrastructure.

Construction (12.7% share, 4.3% growth, 11.3% contribution): Slowdown from 6.4% amid cement and iron-steel output growth indicates a maturing infrastructure cycle (e.g., SGR rail). This implies sustained employment in labor-intensive projects but potential fiscal pressure if public spending tapers. Positive: Multiplier effects on transport and real estate.

Tertiary Sector Implications (37.9% of GDP)

Trade & Repair (8.4% share, 3.5% growth): Decline from 5.3% due to moderate imports and agriculture flows suggests subdued consumer demand or supply chain issues, potentially signaling inflationary pressures or weaker external trade amid global tensions. Implications: Slower retail growth could limit informal sector jobs, but ties to agriculture imply recovery with better harvests.

Transport & Storage (7.2% share, 6.5% growth, 9.3% contribution): Driven by cargo and SGR services, this enhances logistics efficiency, reducing costs for exports and imports. Implications: Boosts trade competitiveness, tourism, and regional integration (EAC), with potential for more FDI in ports/rail.

Financial & Insurance (3.5% share, 15.4% growth, 12.0% contribution): Supported by deposits (+18.5% to TZS 43.0 trillion) and loans (+14.7% to TZS 39.1 trillion), this reflects deepening financial inclusion via mobile money and credit expansion. Implications: Stimulates investment across sectors, but rapid credit growth risks non-performing loans if economic shocks hit.

Information & Communication (1.6% share, 7.8% growth): Sharp slowdown from 14.6% despite mobile/internet expansion implies saturation or competition. Implications: Digital economy growth supports fintech and e-commerce, enhancing productivity, but slower pace could hinder tech-driven diversification.

Education (2.2% share, 8.6% growth): Rising enrollments signal human capital investment, implying long-term productivity gains and reduced inequality.

Key Insights and Broader Risks

Top contributors (mining 15.4%, agriculture 14.2%, finance 12.0%) highlight a balanced yet resource-heavy growth model, with strongest rates in electricity (19.0%) and mining (16.6%) pointing to infrastructure-led momentum. Weaker areas like construction (4.3%), trade (3.5%), and ICT (7.8%) suggest external vulnerabilities. Overall, this fosters employment (especially in services/mining), fiscal revenues, and poverty alleviation, but calls for diversification to mitigate climate risks, global trade disruptions, and debt sustainability. IMF recommendations emphasize reforms for private sector growth to sustain 6%+ annual expansion.

Comparative Analysis of Public-Private Partnership (PPP) Models: Lessons for Tanzania from Global Best Practices

TICGL’s Economic Research Centre has published a discussion paper authored by Amran Bhuzohera and Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com), providing an in-depth comparative analysis of Public-Private Partnership (PPP) models. The study draws lessons from the United Kingdom, Singapore, and Kenya to inform reforms in Tanzania’s infrastructure financing and governance landscape.

Dr. Bravious Felix Kahyoza, as a certified professional in Financial Modeling & Valuation Analyst (FMVA) and Certified PPP Professional (CP3P), brings advanced expertise in project feasibility, risk management, and investment performance, reflecting a strong commitment to evidence-based decision-making and sustainable economic development in Tanzania.

The research addresses Tanzania’s $25 billion infrastructure deficit across energy, transport, and health sectors, emphasizing PPPs as a cornerstone for achieving the Tanzania Development Vision 2025 (TDV 2025) and the Third National Five-Year Development Plan (FYDP III) objectives.

Through cross-country benchmarking, the study reveals that:

• ⚙️ Risk-sharing and adaptive governance underpin the efficiency of global PPP models—Singapore’s hybrid GLC framework achieves 95% project efficiency, while Kenya’s concessional model records 70% scalability.
• 📊 Tanzania’s PPP performance remains modest, with only 15 operational projects and a 6–8% return on investment (ROI)—far below global averages of 10–16%.
• 💡 Comparative data show that hybrid equity models (public-private joint ventures) and electronic monitoring can reduce project cost overruns by 20–30%.
• 🏗️ Implementation gaps—including regulatory delays (18–24 months) and limited technical capacity—continue to deter private participation and slow project execution.

The analysis concludes that localized adaptation of global PPP frameworks—blending public accountability with private innovation—could unlock 15–20% more private capital inflows, enhance value-for-money outcomes, and accelerate Tanzania’s pathway to sustainable industrialization.

Key Policy Directions

• Amend the PPP Act to streamline approvals and introduce hybrid joint-venture incentives for renewables and infrastructure.
• Establish a PPP Facilitation Fund to provide viability gap financing and attract strategic investors.
• Implement digital monitoring systems (AI/blockchain-based) to enhance transparency and reduce risk asymmetry.
• Launch capacity development programs training at least 1,000 officials annually in financial modelling, risk allocation, and value-for-money assessments.

By integrating lessons from the UK’s risk transfer mechanisms, Singapore’s relational equity models, and Kenya’s concessional practices, Tanzania can strengthen its PPP ecosystem, bridging infrastructure gaps while ensuring inclusive and resilient growth.

📘 Read the Full Discussion Paper:
“Comparative Analysis of Public-Private Partnership (PPP) Models: Lessons for Tanzania from Global Best Practices”
Authored by Amran Bhuzohera and Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P
Published by TICGL | Economic Research Centre

Analyzing Government Policies for a Thriving Digital Economy

TICGL’s Economic Research Centre has published a new study authored by Amran Bhuzohera, Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com), and Dr. Jasinta Msamula Kahyoza PhD, FMVA, CP3P (jmsamula@mzumbe.ac.tz), which investigates the intersection between Artificial Intelligence (AI), youth employment, and government policy frameworks within Tanzania’s evolving digital economy.

The study provides critical insights into how AI-driven transformation can be aligned with national employment strategies and policy reforms to harness the potential of Tanzania’s young workforce. With their combined expertise in economic modeling, innovation policy, and strategic development, the authors contribute to shaping a forward-looking dialogue on technology, inclusion, and sustainable economic growth.

Tanzania’s youth population—over 60% under the age of 25—represents both a demographic dividend and a pressing employment challenge. While official youth unemployment stood at 3.35% in 2024, underemployment and informality remain widespread. The research highlights that the rise of AI, if managed inclusively, could transform this landscape by creating millions of digital jobs and expanding opportunities for self-employment, freelancing, and innovation-driven entrepreneurship.

Key Insights

• AI as a job creator, not just a disruptor: Globally, AI may replace 85 million jobs but create 97 million new ones by 2025, largely in data science, creative design, and tech services. Tanzania’s youth could benefit through AI-driven platforms, digital freelancing, and agritech innovations.
• Digital economy transformation: The Tanzania Digital Economy Strategic Framework (2024–2034) and Youth Development Policy (2024) are pivotal in promoting youth digital skills, while the AI Readiness Assessment Report (2025) recognizes AI’s potential in sectors like agriculture, healthcare, and education.
• Regional and global opportunities: Africa’s digital economy could create 230 million digital jobs by 2030, with Tanzania expected to generate 5 million digital employment opportunities through AI-enabled services and start-ups.
• Private sector collaboration: Programs like the Digital Opportunity Trust (DOT) and PPP-based innovation hubs demonstrate the private sector’s role in providing digital literacy and start-up incubation for youth employment.
• Policy gap: Only 45% of Tanzanian youth have internet access, highlighting a critical need for digital inclusion policies to ensure equitable participation in the AI economy.

Policy Recommendations

To maximize AI’s potential for inclusive growth, the paper proposes the following measures:

• AI Upskilling Program: Integrate AI and digital literacy into school and vocational curricula, targeting 1 million youth by 2028 through partnerships with global e-learning platforms.
• Incentives for AI Entrepreneurship: Offer tax breaks, innovation grants, and incubation funding for 500,000 youth-led AI start-ups in agritech, fintech, and creative industries.
• PPP-Driven Digital Infrastructure: Strengthen the Digital Tanzania project to deliver affordable connectivity and AI tools, especially in rural areas, enabling 2 million indirect digital jobs.
• Ethical and Inclusive AI Governance: Adopt guidelines from the AI Readiness Report (2025) to ensure transparent, bias-free AI development across sectors.

Conclusion

AI presents a transformative opportunity to redefine youth employment and self-employment in Tanzania’s digital economy. When supported by inclusive policies, public-private partnerships, and nationwide digital literacy, AI could shift the narrative from unemployment to innovation. By 2030, Tanzania stands to achieve a digital dividend through job creation, improved productivity, and sustainable youth empowerment — positioning the country as a regional leader in AI-driven development.

📘 Read the Full Discussion Paper:
“Youth Employment in the Age of AI: Analyzing Government Policies for a Thriving Digital Economy”
Authored by Amran Bhuzohera, Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P, and Dr. Jasinta Msamula Kahyoza PhD, FMVA, CP3P
Published by TICGL | Economic Research Centre
🌐 www.ticgl.com