Tanzania's economic development trajectory

1. Tax/GDP Ratio (%)

• 2021/2022: 11.4%
• 2022/2023: 11.7%
• 2023/2024: 12.1%
• 2024/2025 (projected): 12.5%

This shows the percentage of Gross Domestic Product (GDP) that comes from tax revenue. From 2021/2022 to 2024/2025, this ratio is increasing, indicating an improvement in tax collection or efficiency in revenue generation. Over the four years, the tax/GDP ratio rises by 1.1 percentage points (from 11.4% to 12.5%).

2. GDP (in trillion TZS)

• 2021/2022: 154.8 trillion TZS
• 2022/2023: 176.7 trillion TZS
• 2023/2024: 191.5 trillion TZS
• 2024/2025 (projected): 207.5 trillion TZS

Tanzania’s GDP is growing year by year, with an increase of 52.7 trillion TZS projected over four years, which reflects a healthy economic expansion. From 2021/2022 to 2024/2025, the GDP grows by about 34%.

3. Budget Deficit (% of GDP)

• 2021/2022: -3.2%
• 2022/2023: -3.5%
• 2023/2024: -3.0%
• 2024/2025 (projected): -2.8%

The budget deficit represents how much the government is spending more than it collects in revenue, expressed as a percentage of GDP. The deficit was at its highest in 2022/2023 at -3.5%, but it is projected to decline, showing fiscal consolidation efforts.

4. Public Debt (% of GDP)

• 2021/2022: 39.5%
• 2022/2023: 40.8%
• 2023/2024: 41.2%
• 2024/2025 (projected): 41.5%

Public debt as a percentage of GDP is gradually increasing, indicating that the government's debt levels are rising in proportion to the country's total economic output. However, the increase is modest, only 2 percentage points over four years.

5. Public Debt (in trillion TZS)

• 2021/2022: 61.1 trillion TZS
• 2022/2023: 72.1 trillion TZS
• 2023/2024: 78.9 trillion TZS
• 2024/2025 (projected): 86.1 trillion TZS

The actual public debt in Tanzania is increasing by 25 trillion TZS from 2021/2022 to 2024/2025, showing a steady rise in borrowing. This rise corresponds with the growing economy, and the debt-to-GDP ratio is increasing at a slower pace, meaning that while debt is rising, the economy is growing as well.

A Path Toward Sustainable Economic Growth and Fiscal Stability

1. Tax Revenue Growth (Tax/GDP Ratio)

• The steady increase in the tax-to-GDP ratio from 11.4% in 2021/2022 to 12.5% in 2024/2025 indicates an improving capacity to generate revenue internally. This reflects enhanced tax collection efficiency, better compliance, and possibly a widening tax base.
• Economic Implication: A higher tax-to-GDP ratio strengthens the government’s ability to finance public services, reduce reliance on debt, and invest in development projects such as infrastructure, education, and healthcare.

2. Robust GDP Growth

• The GDP is projected to grow from 154.8 trillion TZS in 2021/2022 to 207.5 trillion TZS in 2024/2025. This signifies that the Tanzanian economy is expanding at a healthy pace, with a growth rate of about 34% over four years.
• Economic Implication: Rising GDP suggests that sectors like agriculture, mining, manufacturing, and services are performing well, contributing to the overall economic growth. This provides opportunities for job creation, increased investments, and poverty reduction efforts.

3. Reduction in Budget Deficit

• The budget deficit narrows from -3.5% in 2022/2023 to -2.8% in 2024/2025. This indicates efforts to bring the government’s spending under control and improve fiscal discipline.
• Economic Implication: A smaller budget deficit reduces the need for external borrowing and creates fiscal space for developmental projects. Controlling the deficit helps maintain macroeconomic stability, which is crucial for sustaining investor confidence and long-term growth.

4. Moderate Rise in Public Debt

• The public debt as a percentage of GDP increases modestly from 39.5% to 41.5% over four years. However, in absolute terms, public debt rises by 25 trillion TZS from 61.1 to 86.1 trillion TZS.
• Economic Implication: Tanzania's debt levels are increasing, but the rise is in line with economic growth. This shows that borrowing is being managed cautiously, likely for infrastructure and development investments rather than unsustainable expenditures. If debt is used effectively to finance growth-enhancing projects, it can contribute positively to long-term economic development.

5. Sustainable Fiscal Management

• The combination of increasing tax revenues, controlled budget deficits, and a modest rise in public debt indicates Tanzania is focusing on sustainable fiscal management. This can help maintain economic stability and resilience against external shocks.

Overall Economic Development Trends:

• Positive Economic Growth: Tanzania is experiencing healthy GDP growth, driven by effective economic policies, investments, and sectoral development.
• Focus on Fiscal Responsibility: The government is working towards reducing deficits while increasing tax revenues, reflecting a commitment to fiscal sustainability.
• Debt Management: Public debt is rising, but within reasonable limits, allowing room for strategic investments in infrastructure and other development projects.

Implication for Development:

• The improvement in tax collection and GDP growth highlights progress towards self-reliance and reducing aid dependence.
• Investments in infrastructure, healthcare, and education can further spur economic growth, job creation, and poverty reduction.
• The stable macroeconomic environment will attract foreign direct investment (FDI), fostering industrialization and technology adoption, key drivers of long-term economic development in Tanzania.

The Tanzania All Share Index (DSEI) is a key benchmark index that tracks the overall performance of all listed companies on the Dar es Salaam Stock Exchange (DSE).

The DSEI serves as a valuable indicator for investors, analysts, and policy makers to gauge the overall health of Tanzania’s stock market. The upward trend in 2024 shows investor confidence and could be driven by various factors such as favorable economic policies, strong corporate earnings, or increased foreign investment. However, the forecasted decline suggests that there may be challenges ahead, possibly related to market corrections or economic adjustments.

1. Current Performance (2024):
   • The DSEI has increased by 358 points, which represents a 20.43% rise since the beginning of 2024. This is a significant uptick, reflecting a strong performance of the Tanzanian stock market this year.
   • This increase is based on data from contracts for difference (CFDs), a financial instrument that allows traders to speculate on the price movements of assets without owning the underlying asset itself.
2. Historical Peak (2015):
   • The DSEI reached its all-time high of 2850.15 points in June 2015, showing a strong historical performance. This indicates that the Tanzanian stock market saw remarkable growth during that period, though it has since experienced fluctuations.
3. Latest Data (September 2024):
   • As of September 12, 2024, the DSEI was recently updated with its current performance metrics, reflecting the strong gains since the start of the year.
4. Forecasts:
   • End of 2024 Q3 (by September 30, 2024): According to TICGL Economics global macro models and analysts’ expectations, the DSEI is predicted to trade at 2081.02 points by the end of this quarter. This suggests a slight drop compared to the current level but still reflects relative stability in the index.
   • 12-Month Outlook (2025): The DSEI is forecasted to trade at 2026.01 points within the next 12 months, indicating a possible moderate decline over the longer term.
     

Tanzania stock market and economy

The current stock market surge in Tanzania signals short-term strength and investor confidence, but the forecasted decline suggests that there may be challenges ahead, requiring careful monitoring of economic and market conditions. This mixed outlook indicates a need for cautious optimism when investing in Tanzanian equities.

1. Strong Stock Market Performance in 2024:
   • The 20.43% increase since the beginning of 2024 reflects growing investor confidence in Tanzanian businesses. It suggests that the listed companies are performing well or that external factors (such as favorable policies, investor sentiment, or economic conditions) are encouraging investment.
   • This growth indicates economic optimism or recovery, possibly fueled by sectors such as banking, telecommunications, or agriculture, which are key to Tanzania’s economy.
2. Historical High in 2015:
   • The fact that the DSEI reached its all-time high in 2015 but is currently trading below that peak indicates that the market has experienced some fluctuations or challenges since then. Factors like economic slowdowns, political changes, or external shocks may have contributed to this decline.
3. Moderate Forecasts for the Future:
   • The forecast for the DSEI to drop slightly to 2081.02 by the end of Q3 2024 and further to 2026.01 over the next 12 months suggests that analysts expect some cooling off in the stock market. This might indicate concerns over economic growth slowing down, challenges in corporate profitability, or external risks such as global economic conditions or inflation.
   • It could also mean that the current growth may not be sustainable, and market corrections are anticipated.
4. Market Volatility and Investor Sentiment:
   • The increase in 2024 followed by a projected decline implies that the market may be experiencing some volatility. While investor sentiment is currently positive, analysts foresee potential risks or market corrections that could impact future performance.
5. Broader Economic Signals:
   • The stock market often reflects the broader economy. The growth in the DSEI points to a relatively strong economic performance in 2024, possibly driven by sectors benefiting from government policies, foreign investment, or economic reforms.
   • However, the projected decline might signal caution regarding future economic growth, possibly linked to inflation, interest rates, or global economic challenges.

Viwango vya sasa na vya utabiri vya mfumuko wa bei ya vyakula vinaonyesha kuwa Tanzania inapiga hatua katika kuhakikisha utulivu wa kiuchumi, kuboresha uzalishaji wa kilimo, na kuunda mazingira yanayovutia uwekezaji zaidi. Hii inaonyesha mwelekeo mzuri wa maendeleo ya kiuchumi ya Tanzania, ikionesha kuwa taifa linakwenda katika ukuaji endelevu na kuboresha hali za maisha za wananchi wake.

1. Kiwango cha Mfumuko wa Bei ya Vyakula (Agosti 2024):
   Katika Agosti 2024, gharama ya vyakula Tanzania ilipanda kwa asilimia 2.80% ikilinganishwa na Agosti 2023. Hii inaonyesha kuwa, wastani, bei za vyakula ziliongezeka kwa kiasi kidogo katika kipindi cha mwaka mmoja uliopita. Hili ni kiwango cha chini cha mfumuko wa bei ikilinganishwa na historia ya miaka iliyopita, ikiashiria udhibiti bora wa utulivu wa bei ya vyakula katika kipindi hiki.
   
2. Historia ya Mfumuko wa Bei ya Vyakula (2010–2024):
   • Wastani wa mfumuko wa bei ya vyakula Tanzania kati ya 2010 hadi 2024 ulikuwa asilimia 7.85%, ikionyesha kuwa bei za vyakula ziliongezeka kwa kiwango cha juu zaidi katika kipindi hiki.
   • Mwezi Januari 2012, kiwango cha juu zaidi cha mfumuko wa bei ya vyakula kilirekodiwa kuwa asilimia 27.84%, kilichosababishwa na mambo kama mavuno hafifu, kuongezeka kwa bei za bidhaa za kimataifa, na pengine gharama kubwa za usafirishaji na usambazaji.
   • Kiwango cha chini kabisa cha mfumuko wa bei ya vyakula kilirekodiwa Machi 2019 kwa asilimia 0.10%, ikionesha karibu utulivu wa bei za vyakula wakati huo, pengine kutokana na hali nzuri ya kilimo au hatua madhubuti za serikali.
3. Matarajio ya Baadaye kwa 2024:
   Kulingana na mifano ya kimataifa ya TICGL na matarajio ya wachambuzi:
   • Mfumuko wa bei ya vyakula unatarajiwa kupungua zaidi hadi asilimia 2.60 kufikia mwisho wa robo ya tatu ya 2024 (Q3 2024). Hii inaashiria kuwa bei za vyakula zitaendelea kuwa tulivu kwa muda mfupi, isipokuwa kama kutakuwa na changamoto zisizotarajiwa.
4. Matarajio ya Muda Mrefu (2025–2026):
   • Katika muda mrefu, mfumuko wa bei ya vyakula unatarajiwa kupungua zaidi, huku viwango vikitarajiwa kufikia asilimia 1.40 mwaka 2025 na asilimia 1.10 mwaka 2026. Matarajio haya yanaonyesha matarajio ya kuongezeka kwa utulivu wa bei za vyakula, jambo ambalo linaweza kutokana na maboresho katika uzalishaji wa kilimo, ufanisi katika minyororo ya ugavi, au sera nzuri za kiuchumi zinazolenga kudhibiti bei za vyakula.
     

Uchanganuzi wa Mfumuko wa Bei ya Vyakula Tanzania

1. Utulivu wa Bei na Udhibiti wa Mfumuko wa Bei:
   • Kiwango cha wastani cha mfumuko wa bei ya vyakula cha asilimia 2.80 mnamo Agosti 2024, ikilinganishwa na wastani wa juu zaidi wa kihistoria, kinaonyesha kuwa Tanzania inafanikiwa kudhibiti bei za vyakula. Hii inaweza kuwa ishara ya usimamizi bora wa kiuchumi, uzalishaji bora wa kilimo, na udhibiti mzuri wa shinikizo za mfumuko wa bei.
   • Mwelekeo wa kupungua kwa mfumuko wa bei, huku matarajio ya asilimia 1.40 ifikapo 2025 na asilimia 1.10 ifikapo 2026, yanaonyesha matarajio ya utulivu wa kiuchumi wa kudumu. Viwango vya chini vya mfumuko wa bei vinaongeza uwezo wa kununua na kuchangia kupunguza umaskini kwa kuhakikisha bidhaa muhimu kama vyakula zinabaki kuwa nafuu.
     
2. Kuboreka kwa Sekta ya Kilimo:
   
   • Kihistoria, kupanda kwa kasi kwa mfumuko wa bei ya vyakula (kama asilimia 27.84 mnamo Januari 2012) kulisababishwa na kuzorota kwa uzalishaji wa kilimo, mavuno duni, au upungufu wa ufanisi katika minyororo ya usambazaji. Viwango vya chini vya sasa na vya utabiri vinaashiria maboresho katika sekta ya kilimo ya Tanzania.
     
   • Utulivu na viwango vya chini vya mfumuko wa bei vinaonyesha kuwa juhudi za Tanzania za kuongeza uzalishaji, kuboresha teknolojia za kilimo, na kuhakikisha usalama wa chakula zinafanikiwa, hivyo kuchangia ukuaji wa uchumi wa jumla.
     
3. Utulivu wa Kiuchumi wa Jumla:
   • Viwango vya chini vya mfumuko wa bei kwa kawaida vina uhusiano na utulivu wa kiuchumi. Katika hali hii, kushuka kwa mfumuko wa bei ya vyakula kunamaanisha kuwa sera za kifedha na za kiuchumi za Tanzania zinasaidia kudhibiti mfumuko wa bei kwa ufanisi.
   • Viwango thabiti vya mfumuko wa bei vinaweza kuvutia uwekezaji kwa kutoa mazingira ya kiuchumi yenye utabiri. Wawekezaji wanavutiwa zaidi kuwekeza katika sekta kama kilimo, viwanda, na biashara endapo wanajua kuwa mfumuko wa bei hautaharibu faida zao.
4. Kuimarika kwa Uwezo wa Wateja na Kupunguza Umaskini:
   • Kadri bei za vyakula zinavyotulia, hasa katika nchi ambapo vyakula vinachukua sehemu kubwa ya matumizi ya kaya, watumiaji wanapata imani zaidi katika uwezo wao wa kununua. Hii inaongeza ustawi wa kaya na kupunguza hatari ya ukosefu wa usalama wa chakula, jambo muhimu kwa maendeleo ya binadamu kwa ujumla.
   • Mfumuko wa bei ya chini huchangia kupunguza umaskini, kwani bei za vyakula zinazotulia au kushuka zina maana kwamba kaya, hasa zile zenye kipato cha chini, zinaweza kumudu mahitaji ya msingi, hivyo kuboresha viwango vya maisha.
5. Ulinganifu na Malengo ya Maendeleo ya Muda Mrefu:
   • Kupungua kwa mfumuko wa bei ya vyakula kunalingana na malengo mapana ya maendeleo ya kiuchumi ya Tanzania, kama vile Dira ya Maendeleo ya 2025, inayolenga kufikia uchumi wa kipato cha kati. Kwa kuhakikisha utulivu wa bei za vyakula, serikali inashughulikia moja ya vipengele muhimu vya maendeleo endelevu: uimara wa kiuchumi na usalama wa chakula.
   • Bei za vyakula thabiti pia zinaunga mkono sekta nyingine kama utalii, viwanda, na biashara, kwani mfumuko wa bei ya chini husaidia kudumisha ushindani wa bei za bidhaa na huduma.
6. Kuvutia Uwekezaji wa Ndani na wa Kimataifa:
   • Kadri mfumuko wa bei unavyotulia, hasa mfumuko wa bei ya vyakula, Tanzania inakuwa kivutio zaidi kwa wawekezaji wa ndani na wa kimataifa. Mazingira thabiti ya mfumuko wa bei hupunguza kutotabirika, hivyo kuruhusu biashara kupanga kwa muda mrefu na kupunguza hatari ya mabadiliko ya bei ambayo yanaweza kupunguza faida.
   • Kwa matarajio ya mfumuko wa bei ya vyakula kufikia asilimia 1.10 ifikapo 2026, Tanzania inaweza kushuhudia ongezeko la uwekezaji katika sekta zake za kilimo na usindikaji wa vyakula, jambo linaloweza kuchochea uundaji wa ajira, ukuaji wa usafirishaji bidhaa nje ya nchi, na ongezeko la Pato la Taifa (GDP).
7. Mafanikio ya Sera:
   • Matarajio haya yanaonyesha mafanikio ya sera zinazolenga usalama wa chakula, kama vile maboresho ya kilimo, programu za maendeleo ya vijijini, na maboresho ya miundombinu (kama vile mitandao bora ya usafirishaji wa vyakula). Pia inaonyesha maendeleo katika juhudi za Tanzania za kupunguza utegemezi wa uagizaji wa vyakula kwa kuongeza uzalishaji wa ndani.
   • Sera za serikali za kudhibiti mfumuko wa bei na kuhakikisha utulivu wa kiuchumi, kama vile sera za fedha za tahadhari na udhibiti wa matumizi ya umma, pia zinazaa matokeo.

The current and projected low food inflation rates suggest that Tanzania is making strides in ensuring economic stability, improving its agricultural productivity, and fostering a more investment-friendly environment. This reflects positively on Tanzania's overall economic development trajectory, indicating a movement toward sustainable growth and enhanced living conditions for its population.

1. Food Inflation Rate (August 2024):
   In August 2024, the cost of food in Tanzania rose by 2.80% compared to August 2023. This indicates that, on average, food prices increased moderately over the past year. This is a relatively low inflation rate compared to historical trends, reflecting better control over food price stability during this period.
2. Historical Food Inflation (2010–2024):
   • The average food inflation rate in Tanzania from 2010 to 2024 was 7.85%, suggesting that food prices generally increased at a higher rate during this period.
   • January 2012 saw the highest recorded food inflation rate of 27.84%, driven by factors such as poor agricultural output, global commodity price spikes, and possibly higher costs of transportation and distribution.
   • The lowest food inflation rate was recorded in March 2019, at just 0.10%, reflecting near price stability for food products during that time, possibly due to favorable agricultural conditions or effective government interventions.
3. Future Projections for 2024:
   According to TICGL's global macro models and analysts' expectations:
   • Food inflation is expected to moderate further to 2.60% by the end of the current quarter (Q3 2024). This suggests that food prices will likely remain relatively stable in the near term, barring any unforeseen disruptions.
4. Long-term Projections (2025–2026):
   • In the longer term, food inflation is projected to decline further, with rates expected to reach 1.40% in 2025 and 1.10% in 2026. These projections indicate an expectation of increased stability in food prices, which could be due to improvements in agricultural productivity, supply chain efficiencies, or favorable economic policies aimed at food price control.

Food inflation in Tanzania, particularly the trends and future projections, insights into the country's economic development

1. Price Stability and Inflation Control:

• The moderate food inflation rate of 2.80% in August 2024, compared to much higher historical averages, suggests that Tanzania is managing to stabilize food prices. This can be a sign of improving economic management, agricultural output, and better control over inflationary pressures.
• A declining trend in inflation rates, with future projections of 1.40% by 2025 and 1.10% by 2026, indicates expectations of sustained economic stability. Lower inflation rates enhance purchasing power and contribute to poverty reduction by keeping essential goods like food affordable.

2. Improved Agricultural Sector:

• Historically, food inflation spikes (like the 27.84% in January 2012) have been driven by disruptions in agricultural production, poor harvests, or supply chain inefficiencies. The current and projected lower rates suggest improvements in Tanzania's agricultural sector. These improvements could be a result of government initiatives, investments in agricultural modernization, better weather patterns, or advancements in logistics.
• Stable and low food inflation implies that Tanzania’s efforts to increase productivity, mechanize agriculture, and ensure food security are yielding positive results, contributing to overall economic growth.

3. Macroeconomic Stability:

• Lower inflation rates are generally linked to macroeconomic stability. In this case, the expected decline in food inflation suggests that Tanzania’s fiscal and monetary policies are helping to manage inflation effectively.
• Stable inflation rates can attract investment by providing a predictable economic environment. Investors are more likely to invest in sectors like agriculture, manufacturing, and retail if they know that inflation will not erode their returns.

4. Consumer Confidence and Poverty Reduction:

• As food prices stabilize, especially in a country where food comprises a significant portion of household expenditures, consumers experience more confidence in their purchasing power. This supports household welfare and reduces the risk of food insecurity, which is crucial for overall human development.
• Lower inflation contributes to reducing poverty, as stable or declining food prices mean that households, particularly low-income ones, can afford basic necessities, thus improving living standards.

5. Alignment with Long-term Development Goals:

• The expected reduction in food inflation aligns with Tanzania’s broader economic development goals, such as Vision 2025, which focuses on achieving a middle-income economy. By ensuring food price stability, the government is addressing one of the key components of sustainable development: economic resilience and food security.
• Stable food prices also support other sectors like tourism, industry, and trade, as lower inflation contributes to maintaining competitive pricing for goods and services.

6. Global and Domestic Investment Attractiveness:

• As inflation stabilizes, particularly food inflation, Tanzania becomes more attractive to both domestic and international investors. A stable inflation environment reduces uncertainty, allowing businesses to plan long-term and reducing the risk of volatile price swings that could erode profit margins.
• With projected food inflation as low as 1.10% by 2026, Tanzania may experience increased investment in its agricultural and food processing sectors, spurring job creation, export growth, and increased GDP.

7. Policy Success:

• The projections reflect the success of policies aimed at food security, such as agricultural modernization, rural development programs, and infrastructural improvements (like better transport networks for distributing food). It also shows progress in Tanzania’s efforts to reduce dependency on food imports by enhancing local production.
• Government policies to control inflation and ensure macroeconomic stability, such as prudent monetary policy and controlled public spending, are also yielding results.

Muundo wa deni unaonyesha kwamba Tanzania inawekeza kikamilifu katika maendeleo ya kiuchumi, kwa lengo la kuboresha miundombinu na sekta za kijamii. Hata hivyo, utegemezi mkubwa kwenye deni la nje na athari za kubadilika kwa sarafu ni maeneo yanayohitaji usimamizi wa makini ili kuhakikisha ukuaji endelevu wa uchumi.

Deni la nje

Kufikia Julai 2024, deni la nje la Tanzania lilikuwa limefikia jumla ya TZS 74,212.8 bilioni, ambapo TZS 72,976.5 bilioni lilikuwa ni deni lililotolewa, na TZS 11,447.1 bilioni lilikuwa bado halijatolewa. Deni lililotolewa lilikuwa linadaiwa zaidi kwa wakopeshaji wa kimataifa (TZS 41,895.1 bilioni), likifuatiwa na deni la kibiashara (TZS 24,804.2 bilioni), na wakopeshaji wa nchi mbili (TZS 2,761.6 bilioni). Serikali kuu ndiyo ilikuwa inadaiwa zaidi (TZS 60,180.6 bilioni), huku sekta binafsi ikiwa imekopa TZS 11,673.7 bilioni. Deni hili lilikuwa hasa limetolewa kwa Dola za Marekani (66.8%), Euro (17%), na Yuan za China (6.4%). Sekta zilizonufaika zaidi na deni hilo ni pamoja na usafirishaji na mawasiliano (TZS 19,196.9 bilioni), ustawi wa jamii na elimu (TZS 17,701.2 bilioni), na nishati na madini (TZS 7,229.3 bilioni). Aidha, malimbikizo ya madeni ya nje yalifikia TZS 4,109.4 bilioni.

Muhtasari wa Deni la Nje hadi Julai 2024:

• Jumla ya deni la nje: TZS 74,212.8 bilioni
• Deni lililotolewa: TZS 72,976.5 bilioni
• Deni ambalo halijatolewa: TZS 11,447.1 bilioni

Mgawanyo wa deni lililotolewa kwa aina ya mkopeshaji:

• Deni la nchi mbili: TZS 2,761.6 bilioni
• Deni la kimataifa: TZS 41,895.1 bilioni
• Deni la kibiashara: TZS 24,804.2 bilioni
• Mikopo ya mauzo ya nje: TZS 2,258.3 bilioni

Mgawanyo kwa mkopaji:

• Serikali kuu: TZS 60,180.6 bilioni
• Mashirika ya umma: TZS 9.4 bilioni
• Sekta binafsi: TZS 11,673.7 bilioni

Sarafu kuu:

• Dola za Marekani: TZS 49,178.2 bilioni (66.8% ya jumla)
• Euro: TZS 12,488.8 bilioni (17%)
• Yuan za China: TZS 4,694.3 bilioni (6.4%)

Matumizi makubwa ya deni la nje:

• Usafirishaji na mawasiliano: TZS 19,196.9 bilioni
• Ustawi wa jamii na elimu: TZS 17,701.2 bilioni
• Msaada wa bajeti: TZS 13,693.6 bilioni
• Nishati na madini: TZS 7,229.3 bilioni

Malimbikizo ya madeni ya nje: TZS 4,109.4 bilioni (hadi Julai 2024).

Deni la ndani

Kufikia Julai 2024, deni la ndani la Tanzania lilifikia TZS 32,465.1 bilioni, ambapo deni hili lilikuwa linatokana zaidi na dhamana za serikali zenye thamani ya TZS 27,220.5 bilioni (83.8% ya jumla), zikiwemo hati fungani za muda mfupi zenye thamani ya TZS 2,128.9 bilioni na hati fungani za muda mrefu za TZS 24,904.5 bilioni. Deni ambalo halijasecuritishwa lilikuwa ni TZS 5,244.6 bilioni (16.2%), likijumuisha zaidi mkopo wa muda mfupi wa TZS 5,226.2 bilioni. Wamiliki wakubwa wa deni hili walikuwa ni benki za kibiashara (30.2%), Benki Kuu ya Tanzania (22.1%), mifuko ya pensheni (27%), na makampuni ya bima (5.7%).

Muhtasari wa Deni la Ndani hadi Julai 2024:

• Jumla ya deni la ndani: TZS 32,465.1 bilioni

Mgawanyo kwa vyombo vya mikopo:

• Dhamana za serikali: TZS 27,220.5 bilioni (83.8% ya jumla)
  • Hati fungani za muda mfupi: TZS 2,128.9 bilioni
  • Hati fungani za muda mrefu: TZS 24,904.5 bilioni
• Deni lisilo securitishwa: TZS 5,244.6 bilioni (16.2% ya jumla)
  • Mkopo wa muda mfupi: TZS 5,226.2 bilioni

Wamiliki wakubwa wa deni la ndani:

• Benki za kibiashara: TZS 9,796.5 bilioni (30.2%)
• Benki Kuu ya Tanzania: TZS 7,186.3 bilioni (22.1%)
• Mifuko ya pensheni: TZS 8,780.4 bilioni (27%)
• Makampuni ya bima: TZS 1,853.2 bilioni (5.7%)

Deni kuu la Taifa

Kufikia Julai 2024, jumla ya deni la taifa (deni la nje + deni la ndani) lilikuwa TZS 104,837.9 bilioni. Hii inaonyesha taasisi za kimataifa ndizo watoaji wakuu wa deni la nje la Tanzania, huku serikali kuu ikiwa mkopaji mkuu. Kwa deni la ndani, dhamana za serikali ndizo zinaongoza, hususan hati fungani za muda mrefu, na benki za kibiashara pamoja na mifuko ya pensheni ndiyo wamiliki wakubwa.

Hitimisho:

1. Uwekezaji katika miundombinu na maendeleo ya kijamii: Sehemu kubwa ya deni la nje imeelekezwa kwenye usafirishaji na mawasiliano (TZS 19,196.9 bilioni) na ustawi wa jamii na elimu (TZS 17,701.2 bilioni).
2. Utegemezi wa fedha za nje: Tanzania inaonekana kutegemea sana fedha za nje kwa miradi yake ya maendeleo.
3. Msaada wa kimataifa: Sehemu kubwa ya deni la nje ni kutoka kwa taasisi za kimataifa (TZS 41,895.1 bilioni), zinazoonyesha uhusiano mzuri wa kifedha wa Tanzania.
4. Ongezeko la mikopo ya kibiashara: Deni la kibiashara linaonyesha Tanzania inaongezeka kwa uaminifu katika soko la kimataifa.
5. Hatari ya kubadilika kwa sarafu: Kwa asilimia 66.8 ya deni likiwa kwenye Dola za Marekani, Tanzania inakabiliwa na hatari ya mabadiliko ya sarafu.
6. Maendeleo ya soko la ndani: Deni la ndani, hasa kupitia dhamana za serikali, linaonyesha soko la fedha la ndani linaloendelea.
7. Msaada wa bajeti: Sehemu kubwa ya deni la nje imeelekezwa kwenye msaada wa bajeti na mizania ya malipo (TZS 13,693.6 bilioni).
8. Ushirikiano wa sekta binafsi: Deni la nje la sekta binafsi ni TZS 11,673.7 bilioni, linaloonyesha ushiriki wa sekta binafsi katika mikopo ya kimataifa.
9. Changamoto za usimamizi wa deni: Jumla ya deni la taifa ni kubwa na inahitaji ufuatiliaji wa karibu kulingana na ukuaji wa Pato la Taifa.
10. Uwekezaji katika nishati na madini: Sehemu kubwa ya deni imeelekezwa kwenye nishati na madini (TZS 7,229.3 bilioni), ikilenga ukuaji wa baadaye wa kiuchumi.

The debt structure suggests Tanzania is actively investing in its economic development, with a focus on infrastructure and social sectors. However, the reliance on external debt and exposure to currency risk are areas that require careful management to ensure sustainable economic growth.

External debt

As of July 2024, Tanzania's total external debt stock amounted to $29,685.1 million, with disbursed outstanding debt at $29,184.8 million and undisbursed debt at $4,572.0 million. The disbursed debt was mainly owed to multilateral creditors ($17,046.3 million), followed by commercial debt ($10,095.8 million), and bilateral creditors ($1,123.8 million). The central government accounted for the largest share of borrowing ($24,441.9 million), while the private sector borrowed $4,739.1 million. The debt was primarily denominated in US Dollars (66.8%), Euros (17%), and Chinese Yuan (6.4%). Major debt-funded sectors included transport and telecommunications ($7,553.5 million), social welfare and education ($6,969.5 million), and energy and mining ($2,846.9 million). Additionally, external debt arrears totaled $1,617.3 million.

As of July 2024:

• Total external debt stock: $29,685.1 million
• Disbursed outstanding debt: $29,184.8 million
• Undisbursed debt: $4,572.0 million

Breakdown of disbursed external debt by creditor category:

• Bilateral debt: $1,123.8 million
• Multilateral debt: $17,046.3 million
• Commercial debt: $10,095.8 million
• Export credits: $918.9 million

Breakdown by borrower category:

• Central government: $24,441.9 million
• Public corporations: $3.8 million
• Private sector: $4,739.1 million

Main currencies:

• US Dollar: $19,491.5 million (66.8% of total)
• Euro: $4,947.1 million (17.0%)
• Chinese Yuan: $1,855.6 million (6.4%)

Major uses of external debt funds:

• Transport and telecommunication: $7,553.5 million
• Social welfare and education: $6,969.5 million
• Balance of payments and budget support: $5,397.8 million
• Energy and mining: $2,846.9 million

External debt arrears totaled $1,617.3 million as of July 2024.

Domestic debt

As of July 2024, Tanzania's total domestic debt stood at 32,465.1 billion Tanzania shillings. This debt was primarily composed of government securities amounting to 27,220.5 billion TZS (83.8% of the total), including 2,128.9 billion TZS in Treasury bills and 24,904.5 billion TZS in Treasury bonds. Non-securitized debt accounted for 5,244.6 billion TZS (16.2%), with the bulk being an overdraft of 5,226.2 billion TZS. The main holders of this debt were commercial banks (30.2%), the Bank of Tanzania (22.1%), pension funds (27.0%), and insurance companies (5.7%).

As of July 2024:

• Total domestic debt stock: 32,465.1 billion Tanzania shillings

Breakdown by borrowing instruments:

• Government securities: 27,220.5 billion TZS (83.8% of total)
  • Treasury bills: 2,128.9 billion TZS
  • Treasury bonds: 24,904.5 billion TZS
• Non-securitized debt: 5,244.6 billion TZS (16.2% of total)
  • Overdraft: 5,226.2 billion TZS

Main holders of domestic debt:

• Commercial banks: 9,796.5 billion TZS (30.2%)
• Bank of Tanzania: 7,186.3 billion TZS (22.1%)
• Pension funds: 8,780.4 billion TZS (27.0%)
• Insurance companies: 1,853.2 billion TZS (5.7%)

Total national debt

As of July 2024, Tanzania's total national debt stock (external + domestic) stood at $41,844.1 million.

The figures shows that multilateral institutions are the largest creditors for Tanzania's external debt, while the central government is the primary borrower. For domestic debt, government securities, particularly Treasury bonds, make up the majority of the debt stock, with commercial banks and pension funds being the main holders:

1. Infrastructure and social development focus: The largest portions of external debt are allocated to transport and telecommunication ($7,553.5 million) and social welfare and education ($6,969.5 million). This suggests Tanzania is investing heavily in infrastructure and human capital, which are crucial for long-term economic development.
2. Reliance on external financing: With a total external debt of $29,685.1 million compared to a domestic debt of about $12,159.0 million (converted from TZS), Tanzania appears to rely significantly on external financing for its development projects. This could indicate limited domestic savings or a need for foreign expertise and technology.
3. Multilateral support: The largest share of external debt is from multilateral institutions ($17,046.3 million). This suggests Tanzania has good relationships with international financial institutions, which often provide loans at concessional rates and with development-oriented conditions.
4. Increasing commercial borrowing: Commercial debt accounts for a significant portion of external debt ($10,095.8 million), indicating Tanzania's growing access to international capital markets. This can be seen as a sign of increasing economic credibility, but also potentially higher borrowing costs.
5. Currency risk: With 66.8% of external debt denominated in US dollars, Tanzania faces significant currency risk. Any depreciation of the Tanzania shilling against the dollar could increase the debt burden.
6. Domestic market development: The substantial domestic debt, particularly in government securities, suggests a developing local financial market. This is positive for economic development as it provides alternative financing sources and investment opportunities.
7. Balance of payments support: A significant portion of external debt ($5,397.8 million) is for balance of payments and budget support, indicating some macroeconomic challenges that require external assistance.
8. Private sector involvement: Private sector external debt of $4,739.1 million suggests some level of private sector engagement in international borrowing, which could be positive for economic growth if invested productively.
9. Debt sustainability concerns: The total national debt of $41,844.1 million is substantial. While not necessarily problematic on its own, it's important to monitor this in relation to GDP growth and export earnings to ensure long-term sustainability.
10. Investment in energy and mining: Significant debt allocation to energy and mining ($2,846.9 million) indicates efforts to develop these sectors, which could be crucial for future economic growth and export earnings.

The depreciation of the Tanzania shilling (TZS) is a key factor that can have significant impacts on the country's economic development. Focus on the causes, effects, and implications of the shilling’s depreciation.

1. Depreciation Figures

• Exchange Rate in July 2024: The Tanzania shilling traded at an average of TZS 2,663.76 per USD in July 2024.
• Exchange Rate in June 2024: In the preceding month (June 2024), the shilling traded at TZS 2,626.07 per USD.
• Annual Depreciation: Over the past 12 months, the shilling depreciated by 12.6% against the USD.

2. Factors Contributing to Depreciation

• Trade Imbalances: Tanzania’s import costs (e.g., for fuel, machinery, fertilizers, and other goods) may be higher than its export revenues, creating a trade imbalance that weakens the currency.
• Inflationary Pressures: The increasing yields on government securities (like the rise in Treasury bills from 6.75% in June to 8.81% in July 2024) suggest inflationary pressure in the economy, which typically leads to currency depreciation.
• Global Market Conditions: Depreciation can be influenced by international factors such as the strength of the US dollar, rising global interest rates, and fluctuations in the prices of key commodities like oil and gold. Since Tanzania imports several essential goods, a stronger USD makes imports more expensive, further straining the shilling.

3. Effects of Depreciation

• Increased Cost of Imports: The depreciation of the shilling makes imported goods more expensive. For example, the cost of importing fuel, machinery, pharmaceuticals, and food items like sugar and edible oil would increase as the value of the shilling falls.
• Example: If the exchange rate was TZS 2,626.07 per USD in June 2024, a USD 100,000 import would cost TZS 262.6 million. By July 2024, at TZS 2,663.76 per USD, the same USD 100,000 import would cost TZS 266.3 million. This represents an additional cost of TZS 3.7 million due to the shilling’s depreciation.
• Higher Inflation: The increased cost of imports, especially for essential goods like fuel and food, can contribute to inflation. Inflation erodes the purchasing power of consumers, reducing their ability to afford goods and services.
• Increased Debt Servicing Costs: For Tanzania’s external debts (those denominated in foreign currencies like the USD), a depreciating shilling means it takes more local currency to service those debts. This increases the debt burden, which could limit the government's ability to invest in infrastructure and other development projects.

4. Benefits of Depreciation

• Boost to Exports: A weaker shilling can make Tanzania exports more competitive in global markets, as Tanzania goods become cheaper for foreign buyers. Sectors like mining (especially gold), agriculture (cash crops like coffee, tobacco, cotton), and tourism stand to benefit.
  • Example: If a Tanzania exporter sells goods worth USD 1 million, the exchange rate in June 2024 would yield TZS 2.626 billion. In July 2024, the same USD 1 million export would yield TZS 2.663 billion—a gain of TZS 37 million due to the weaker shilling.
• Foreign Investment Inflows: A weaker currency can attract foreign direct investment (FDI) as foreign investors can get more value for their money in Tanzania. This could lead to more investments in sectors like manufacturing, infrastructure, and services.

5. Government Measures and Future Expectations

• Gold Exports and Reserves: Tanzania is leveraging its gold exports to generate foreign exchange. The Bank of Tanzania’s domestic gold purchase program aims to increase the country’s foreign reserves, which can help stabilize the shilling.
• Tourism: Seasonal improvements in tourism inflows, especially in July 2024, have provided foreign exchange earnings, which can help offset some of the depreciation pressures.
• Reduction in Imports: The government is focusing on reducing imports of fertilizer, edible oil, and sugar, which could reduce demand for foreign currency and help ease the depreciation of the shilling.

6. Long-term Implications

• Sustained Depreciation: If the depreciation trend continues, Tanzania may face challenges such as:
  • Increased inflation, especially for imported goods.
  • Greater burden on servicing foreign debt.
  • Pressure on domestic consumers due to rising costs.
• Economic Growth: On the positive side, depreciation could stimulate sectors like exports and tourism, driving economic growth and improving the current account balance in the long term.

Summary of Key Figures:

While the depreciation of the Tanzania shilling presents challenges such as higher import costs and inflation, it also offers opportunities for boosting exports and attracting foreign investment. Balancing these effects will be crucial for supporting Tanzania's long-term economic development.

• Current Exchange Rate (July 2024): TZS 2,663.76 per USD.
• Previous Exchange Rate (June 2024): TZS 2,626.07 per USD.
• Annual Depreciation: 12.6% against the USD.

Kushuka kwa thamani ya shilingi ya Tanzania (TZS) ni jambo muhimu linaloweza kuwa na athari kubwa kwenye maendeleo ya uchumi wa nchi. Hii inahusisha kuangalia sababu, athari, na athari za kushuka kwa thamani ya shilingi.

Takwimu za Kushuka Kwa Thamani

• Kiwango cha kubadilisha fedha Julai 2024: Shilingi ya Tanzania ilikuwa inabadilishwa kwa wastani wa TZS 2,663.76 kwa dola moja ya Marekani (USD).
• Kiwango cha kubadilisha fedha Juni 2024: Mwezi uliopita, shilingi ilikuwa inabadilishwa kwa TZS 2,626.07 kwa USD.
• Kushuka kwa mwaka: Katika kipindi cha miezi 12 iliyopita, shilingi imeshuka kwa 12.6% dhidi ya USD.
  

Sababu Zinazochangia Kushuka kwa Thamani

• Uwiano wa Biashara: Gharama za kuagiza bidhaa kama mafuta, mashine, mbolea, na bidhaa nyingine zinaweza kuwa juu kuliko mapato ya mauzo ya nje, na hivyo kusababisha hali ya upungufu wa biashara ambao unadhoofisha shilingi.
• Msondo wa Bei (Inflation): Kuongezeka kwa riba kwenye dhamana za serikali (kama vile kuongezeka kwa hati za hazina kutoka 6.75% Juni hadi 8.81% Julai 2024) kunapendekeza kuwepo kwa msongo wa bei, hali inayoweza kusababisha kushuka kwa thamani ya sarafu.
• Hali ya Soko la Kimataifa: Kushuka kwa thamani kunaweza kuathiriwa na nguvu ya USD, ongezeko la riba za kimataifa, na mabadiliko ya bei ya bidhaa muhimu kama mafuta na dhahabu. Kwa kuwa Tanzania inaagiza bidhaa nyingi muhimu, USD yenye nguvu zaidi hufanya uagizaji kuwa ghali zaidi, hivyo kuendelea kudhoofisha shilingi.
  

Athari za Kushuka kwa Thamani

• Kuongezeka kwa Gharama za Uagizaji: Kushuka kwa shilingi kunafanya bidhaa za nje kuwa ghali zaidi. Kwa mfano, gharama za kuagiza mafuta, mashine, dawa, na vyakula kama sukari na mafuta ya kupikia zitaongezeka kadri shilingi inavyozidi kudhoofika.
  • Mfano: Ikiwa kiwango cha kubadilisha fedha kilikuwa TZS 2,626.07 kwa USD mwezi Juni 2024, uagizaji wa USD 100,000 ungekugharimu TZS 262.6 milioni. Kufikia Julai 2024, kwa TZS 2,663.76 kwa USD, uagizaji huo huo ungekugharimu TZS 266.3 milioni, ongezeko la TZS 3.7 milioni kutokana na kushuka kwa shilingi.

• Msondo wa Bei: Kuongezeka kwa gharama za uagizaji, hasa kwa bidhaa muhimu kama mafuta na chakula, kunaweza kuchangia msongo wa bei (inflation). Hali hii inapunguza uwezo wa watumiaji wa kununua bidhaa na huduma.
• Kuongezeka kwa Gharama za Kulipa Madeni: Kwa madeni ya nje ya Tanzania (yale yanayolipwa kwa sarafu za kigeni kama USD), kushuka kwa shilingi kunamaanisha kuwa inahitaji fedha nyingi za ndani kulipia madeni hayo. Hii inaongeza mzigo wa deni, ambao unaweza kupunguza uwezo wa serikali kuwekeza katika miradi ya maendeleo kama miundombinu.
  

Faida za Kushuka kwa Thamani

• Kuimarika kwa Biashara za Nje: Shilingi dhaifu inaweza kufanya bidhaa za Tanzania kuwa za ushindani zaidi kwenye masoko ya kimataifa, kwa kuwa bidhaa za Tanzania zinakuwa za bei nafuu kwa wanunuzi wa nje. Sekta kama madini (hasa dhahabu), kilimo (mazao ya biashara kama kahawa, tumbaku, pamba), na utalii zinaweza kufaidika.
  • Mfano: Ikiwa mzalishaji wa Tanzania anauza bidhaa zenye thamani ya USD milioni 1, kiwango cha kubadilisha fedha mwezi Juni 2024 kingetoa TZS 2.626 bilioni. Julai 2024, mauzo hayo ya USD milioni 1 yangezaa TZS 2.663 bilioni—ongezeko la TZS milioni 37 kutokana na kudhoofika kwa shilingi.
    
• Uwekezaji wa Kigeni: Shilingi dhaifu inaweza kuvutia uwekezaji wa moja kwa moja kutoka nje (FDI), kwani wawekezaji wa kigeni wanaweza kupata thamani zaidi ya fedha zao nchini Tanzania. Hii inaweza kusababisha uwekezaji zaidi kwenye sekta kama viwanda, miundombinu, na huduma.

Hatua za Serikali na Matarajio ya Baadaye

• Mauzo ya Dhahabu na Akiba: Tanzania inatumia mauzo ya dhahabu kuzalisha fedha za kigeni. Mpango wa Benki Kuu ya Tanzania kununua dhahabu nchini unalenga kuongeza akiba ya kigeni, jambo ambalo linaweza kusaidia kuimarisha shilingi.
• Utalii: Kuongezeka kwa mapato kutoka sekta ya utalii, hasa Julai 2024, kumetoa mapato ya fedha za kigeni, jambo linaloweza kusaidia kupunguza shinikizo la kushuka kwa shilingi.
• Kupunguza Uagizaji: Serikali inazingatia kupunguza uagizaji wa bidhaa kama mbolea, mafuta ya kupikia, na sukari, hali inayoweza kupunguza mahitaji ya fedha za kigeni na kusaidia kupunguza kushuka kwa shilingi.
  

Athari za Muda Mrefu

Kushuka Kwa Muda Mrefu: Ikiwa hali hii itaendelea, Tanzania inaweza kukumbana na changamoto kama:

• Kuongezeka kwa msongo wa bei, hasa kwa bidhaa zinazoagizwa.
• Kuongezeka kwa mzigo wa kulipa madeni ya kigeni.
• Shinikizo kwa watumiaji wa ndani kutokana na kupanda kwa gharama.
• Ukuaji wa Uchumi: Kwa upande mwingine, kushuka kwa thamani kunaweza kuchochea sekta kama biashara za nje na utalii, na hivyo kuchangia ukuaji wa uchumi na kuboresha uwiano wa malipo kwa muda mrefu.

Muhtasari wa Takwimu Muhimu: Wakati kushuka kwa shilingi ya Tanzania kunaleta changamoto kama gharama za juu za uagizaji na msongo wa bei, pia kunatoa fursa za kuongeza biashara za nje na kuvutia uwekezaji wa kigeni. Kuweka usawa kati ya athari hizi kutakuwa muhimu kwa kuunga mkono maendeleo ya uchumi wa muda mrefu wa Tanzania.

• Kiwango cha sasa cha kubadilisha fedha (Julai 2024): TZS 2,663.76 kwa USD.
• Kiwango cha awali cha kubadilisha fedha (Juni 2024): TZS 2,626.07 kwa USD.
• Kushuka kwa mwaka: 12.6% dhidi ya USD.
  

Hitimisho

Kushuka kwa thamani ya shilingi ya Tanzania kuna athari nyingi kwa uchumi. Ingawa kunaongeza gharama za uagizaji na kusababisha msongo wa bei, pia kunaweza kuimarisha ushindani wa bidhaa za Tanzania kimataifa na kuvutia uwekezaji wa kigeni. Serikali inachukua hatua kama kuongeza mauzo ya dhahabu na kupunguza uagizaji ili kudhibiti hali hii. Athari za muda mrefu zinategemea usimamizi mzuri wa changamoto na fursa zinazoambatana na kushuka kwa thamani ya shilingi. Mwisho, usawa kati ya athari hasi na chanya utakuwa muhimu kwa maendeleo ya uchumi wa Tanzania.

The Government Securities Market plays a key role in Tanzania’s economic development by providing a mechanism for the government to raise funds for public spending and investment projects, such as infrastructure, education, and healthcare.

The government securities market in Tanzania is providing essential capital for government operations and development projects. The shift towards longer-term bonds with high yields reflects investor confidence in the economy's long-term stability, despite inflationary pressures and the depreciating shilling. However, the rising borrowing costs could pose challenges for the government’s ability to finance projects without increasing debt servicing burdens. Ultimately, the performance of the government securities market plays a crucial role in shaping Tanzania’s economic development trajectory.

1. Treasury Bills Auctions (July 2024)

• Total Tender Size: The government offered a combined tender of TZS 253.3 billion.
  • These funds were primarily aimed at government financing (to support the national budget and development projects) with a small portion used for price discovery (helping determine the true market interest rate).
• Bids Received: The total bids from investors amounted to TZS 198.2 billion.
  • Figure Explanation: The bids were less than the tender size, indicating that the demand for Treasury bills was lower than the supply, possibly reflecting investor preferences for higher-yield, longer-term instruments (such as Treasury bonds).
• Successful Bids: Out of the TZS 198.2 billion bid, TZS 102.9 billion were successful.
  • Success Rate: This means approximately 51.9% of the bids were accepted by the Bank of Tanzania, leaving about 48.1% of the bids unsuccessful.
• Weighted Average Yield (July 2024): The yield on Treasury bills increased to 8.81% in July, compared to 6.75% in June 2024.
  • Implication: The rising yield indicates that the government is paying a higher interest rate to attract investors, reflecting increased borrowing costs, possibly due to inflationary pressures or higher demand for funds.

2. Treasury Bonds Auctions (July 2024)

• Total Bids Received: Investors placed bids totaling TZS 674.7 billion in the auction of long-term Treasury bonds.
  • Significance: The high volume of bids shows strong investor interest in longer-term, higher-yield government securities, which are seen as safer investments with good returns over time.
• Successful Bids: Out of the total bids, TZS 628.8 billion were accepted.
  • Success Rate: Approximately 93.2% of the bids were accepted, a much higher success rate compared to the Treasury bills auction. This reflects the stronger demand for longer-term bonds.
• Yields on Long-Term Bonds:
  • 15-Year Treasury Bond Yield: 15.05%.
  • 20-Year Treasury Bond Yield: 15.17%.
  • Explanation: These yields are significantly higher than short-term Treasury bills, reflecting the risk premium investors require for locking their funds for longer periods. This also suggests that investors are confident in the government’s ability to meet long-term obligations, and they expect economic stability over the bond's maturity.

3. Performance Trends and Implications

• Shift to Long-Term Investments: Investors prefer long-term bonds (with 15-year and 20-year maturities) over short-term Treasury bills, likely due to the higher yields they offer.
  • Example: Investors can earn a yield of 15.17% on a 20-year bond, compared to just 8.81% on short-term Treasury bills. This reflects investors’ desire for greater returns in an environment where inflation or currency depreciation may erode the value of short-term investments.
• Government Borrowing Costs:
  • The rise in yields, especially on Treasury bills (from 6.75% in June to 8.81% in July 2024), suggests that the government is facing higher borrowing costs. This could be due to rising inflation, increased demand for liquidity, or a higher level of public debt.
  • For long-term bonds, yields of 15.05% and 15.17% reflect the higher risk premium investors require to hold Tanzanian debt for 15 or 20 years.
• Government Financing: By raising TZS 102.9 billion in Treasury bills and TZS 628.8 billion in Treasury bonds, the government has access to nearly TZS 731.7 billion in total from the securities market in July 2024.
  • Significance: This capital is crucial for financing key development projects like infrastructure, healthcare, and education, which are essential for Tanzania’s long-term economic growth.

4. Implications for Economic Development

• Financing Development Projects: The funds raised through government securities are used to finance essential public services and infrastructure projects. This borrowing helps the government invest in areas that directly contribute to economic growth, such as roads, energy, water systems, and social services.
• Crowding Out Private Investment: High government borrowing and rising yields might discourage private sector borrowing by increasing interest rates across the board. This phenomenon is known as crowding out, where the private sector finds it more expensive to access capital due to higher yields on government debt, which competes for funds in the financial market.
• Attracting Domestic and Foreign Investors: The high yields on government bonds (15.05% and 15.17%) can attract both local and foreign investors. Foreign investors, in particular, might see Tanzania as a lucrative investment opportunity due to the high returns, especially when global interest rates are lower.
• Risk of Inflation and Debt Servicing: Rising yields can signal inflationary pressures, which may result from government borrowing or increased money supply. Additionally, the government’s higher borrowing costs mean more budget resources will be used for debt servicing (paying interest on debt), leaving fewer funds for development.

5. Summary of Key Figures:

• Treasury Bills Auction:
  • Tender Size: TZS 253.3 billion.
  • Bids Received: TZS 198.2 billion.
  • Successful Bids: TZS 102.9 billion.
  • Weighted Average Yield: 8.81% in July, up from 6.75% in June.
• Treasury Bonds Auction:
  • Total Bids: TZS 674.7 billion.
  • Successful Bids: TZS 628.8 billion.
  • Yields: 15.05% (15-year bond) and 15.17% (20-year bond).
• Total Government Borrowing (July 2024): TZS 731.7 billion from Treasury bills and bonds combined.

1. Government Securities Market (July 2024)

• Treasury Bills Auctions:
  • Tender Size: TZS 253.3 billion
  • Total Bids Received: TZS 198.2 billion
  • Successful Bids: TZS 102.9 billion
  • Weighted Average Yield: Increased from 6.75% in June 2024 to 8.81% in July 2024.
• Treasury Bonds:
  • Total Bids Received: TZS 674.7 billion
  • Successful Bids: TZS 628.8 billion
  • 15-Year Treasury Bond Yield to Maturity: 15.05%
  • 20-Year Treasury Bond Yield to Maturity: 15.17%

2. Interbank Cash Market (IBCM)

• Total Transactions (July 2024): TZS 2,375.4 billion, a sharp increase from TZS 1,277.6 billion in June 2024.
• 7-Day Transactions: Accounted for 33.3% of total market turnover.
• Overnight Transactions: Increased to 32.6% of total market activity.
• IBCM Interest Rate: Slight decrease to 7.24% from 7.36% in June 2024.

3. Interbank Foreign Exchange Market (IFEM)

• Transactions in IFEM (July 2024): USD 15.3 million, up from USD 9.3 million in June 2024.
• Net Sale of Foreign Exchange by the Bank: USD 2.5 million.
• Average Exchange Rate (July 2024): TZS 2,663.76 per USD, compared to TZS 2,626.07 in June 2024.
• Annual Shilling Depreciation: 12.6% against the USD.

4. Foreign Exchange Earnings and Exports

• Major Contributors:
  • Gold Exports remained the largest contributor.
  • Increased foreign exchange from tourism (seasonal) and crop exports.
• Imports declined, contributing to the improved current account balance.

5. Expectations Moving Forward

• Foreign exchange inflows are expected to rise due to:
  • High gold prices in the global market.
  • Tourism growth, thanks to promotion measures.
  • Exports of cash crops (cashew nut, tobacco, coffee, cotton) and food crops (maize, rice).
• Foreign exchange demand will decrease, driven by:
  • Lower imports of fertilizer, edible oil, and sugar.
  • A domestic payments policy requiring settlements in shillings.

Summary of Key Figures:

• Treasury Bills Auction Success: TZS 102.9 billion at 8.81% yield.
• Treasury Bonds: 15.05% - 15.17% yield to maturity.
• IBCM Transactions: TZS 2,375.4 billion.
• IFEM Transactions: USD 15.3 million with an exchange rate of TZS 2,663.76 per USD.

Focusing on Tanzania’s economic development, trends and implications

Tanzania's financial markets are supporting its economic development by attracting investment, facilitating liquidity in the banking system, and improving foreign exchange inflows. However, careful management of inflation, liquidity, and exchange rate stability will be necessary to maintain momentum in economic growth.

1. Government Securities Market

• Increased Interest in Long-Term Bonds: Investors are showing more interest in long-term instruments like the 15-year and 20-year Treasury bonds, which have high yields (15.05% and 15.17%, respectively). This suggests confidence in the long-term stability of Tanzania’s economy.
• Rising Yields on Treasury Bills: The increase in the weighted average yield for Treasury bills (from 6.75% to 8.81%) reflects rising costs for government borrowing, indicating possible inflationary pressures or an increased need for financing.
• Implication for Economic Development: High yields on government securities can attract both domestic and foreign investors, providing the government with necessary funds for infrastructure, public services, and other development projects.

2. Interbank Cash Market (IBCM)

• Substantial Increase in Transactions: The large rise in interbank cash transactions (from TZS 1,277.6 billion in June to TZS 2,375.4 billion in July) shows increased liquidity and activity in the banking sector. This is essential for ensuring that banks have adequate resources to lend to businesses and consumers, which supports economic activity.
• Shift to Shorter-Term Transactions: The increase in overnight transactions (32.6% of total market activity) points to banks managing short-term liquidity more conservatively due to recent liquidity constraints. This signals temporary pressures in the financial system that could slow lending.
• Implication for Economic Development: Improved liquidity management by banks can support business operations and consumption, but liquidity constraints may need addressing to prevent limiting economic growth.

3. Interbank Foreign Exchange Market (IFEM)

• Increased Foreign Exchange Transactions: The rise in foreign exchange transactions (from USD 9.3 million in June to USD 15.3 million in July) reflects a boost from tourism, gold exports, and crop exports. The seasonal uptick in tourism and strong gold exports are important contributors to foreign exchange earnings.
• Stable but Depreciating Shilling: The steady depreciation of the shilling (by 12.6% annually) suggests some pressure on Tanzania’s external accounts, but not severe misalignment in the exchange rate. A weaker currency can help exports but might increase the cost of imports, particularly essential goods.
• Implication for Economic Development: Increased foreign exchange earnings from exports, especially from tourism and mining, can strengthen Tanzania's external position and boost reserves. However, the shilling’s depreciation could lead to higher import costs, affecting inflation and consumption.

4. Future Expectations

• Growing Foreign Exchange Inflows: The forecasted rise in foreign exchange from mining, tourism, and agriculture (cash crops like cashew nuts, tobacco, and coffee) highlights sectors critical to Tanzania’s economic growth.
• Lower Import Costs: Reducing imports of fertilizer, edible oil, and sugar, along with policies promoting the use of the shilling for domestic payments, will ease pressure on the foreign exchange market, improving the balance of payments and making more resources available for development.
• Foreign Investment: A stable macroeconomic environment is expected to attract more foreign direct investment (FDI), especially in mining, agriculture, and infrastructure. Increased FDI is vital for creating jobs and accelerating industrial growth in Tanzania.

Overall Implications for Economic Development

• Investment in Infrastructure and Development Projects: The government can use funds from Treasury bonds to finance long-term projects, boosting infrastructure and public services.
• Increased Export Revenues: The strength of gold and agricultural exports provides a steady source of foreign exchange, supporting national development plans.
• Challenges from Inflation and Currency Depreciation: The rising yields on government securities and depreciation of the shilling could signal inflationary pressures that may impact purchasing power and import costs.
• Support from Foreign Direct Investment: Continued FDI inflows are essential for diversifying the economy and achieving sustainable development goals.