As of December 2024, Tanzania’s external debt stood at TZS 79.72 trillion (USD 32.93 billion), with 67.8% (TZS 54.10 trillion) denominated in US dollars (USD). The Euro accounted for 16.2% (TZS 12.92 trillion), while the Chinese Yuan made up 6.4% (TZS 5.10 trillion). This heavy reliance on USD borrowing exposes Tanzania to exchange rate risks, where a 10% depreciation of the Tanzania Shilling (TZS) could increase debt servicing costs by TZS 5.41 trillion. To mitigate this risk, Tanzania must enhance foreign reserves, diversify its export earnings, and negotiate more concessional loans to maintain long-term debt sustainability​

Tanzania’s external debt is held in multiple currencies, exposing the country to foreign exchange risks depending on fluctuations in the global market. As of December 2024, the total external debt stock stood at TZS 79.72 trillion (USD 32.93 billion), with the majority denominated in US dollars​.

1. Currency Composition of External Debt (Percentage Share & TZS Value)

2. Key Observations & Implications

✅ US Dollar Dominance (67.8%)

• The majority of Tanzania’s external debt is in USD (TZS 54.10 trillion), making the country highly sensitive to exchange rate fluctuations.
• If the Tanzania Shilling depreciates, debt servicing costs in TZS will increase, putting pressure on government finances.

✅ Euro Loans (16.2%) Provide Some Diversification

• TZS 12.92 trillion is denominated in Euros, offering some protection from USD volatility.
• However, if the Euro strengthens, Tanzania will need more TZS to repay Euro-denominated loans.

✅ Chinese Yuan Exposure (6.4%) Reflects Infrastructure Financing Ties

• TZS 5.10 trillion of Tanzania’s external debt is in CNY, largely financing transport, energy, and telecommunications projects.
• The yuan’s stability reduces risks, but any CNY appreciation will raise repayment costs in TZS.

✅ Other Currencies (9.5%) Reflect a Diverse Creditor Base

• TZS 7.60 trillion is spread across other currencies (GBP, JPY, etc.), limiting reliance on a single currency.
• This reduces overall currency risk but makes debt servicing more complex due to multiple exchange rate fluctuations.

3. Exchange Rate Risks & Debt Management Strategy

⚠️ Tanzania is vulnerable to exchange rate movements, particularly in the USD-TZS exchange rate.
⚠️ If the Tanzania Shilling depreciates against the US dollar, debt servicing costs will increase, reducing fiscal space.
✅ Diversification into Euros and Chinese Yuan helps, but debt repayment strategies should factor in exchange rate risks.

Key Takeaways

📌 67.8% of Tanzania’s external debt (TZS 54.10 trillion) is in US dollars, making debt service costs dependent on USD-TZS fluctuations.
📌 Euro-denominated debt (16.2% or TZS 12.92 trillion) offers some diversification, while CNY exposure (6.4% or TZS 5.10 trillion) reflects infrastructure financing links with China.
📌 Government debt management strategies should focus on reducing currency risks by increasing TZS-denominated borrowing and hedging against USD volatility.

To maintain debt sustainability, Tanzania must closely monitor exchange rate movements, diversify borrowing sources, and prioritize revenue generation to offset repayment risks​

The currency breakdown of Tanzania’s external debt reveals key insights into the country’s financial exposure, exchange rate risks, and debt sustainability

1. Heavy Dependence on the US Dollar (67.8%) Increases Exchange Rate Risk

• USD 54.10 trillion (TZS) of Tanzania’s external debt is in US dollars, meaning any depreciation of the Tanzania Shilling (TZS) against the USD will increase repayment costs.
• If the TZS weakens by just 10%, the government will need an extra TZS 5.41 trillion to service USD-denominated debt.
• Since global interest rates and US monetary policy influence the USD, Tanzania’s debt costs could rise unexpectedly if the USD strengthens.

Implication:
⚠️ Tanzania is highly vulnerable to USD fluctuations, which could increase debt servicing costs and fiscal pressure.
✅ If the Shilling remains stable or strengthens, repayment costs will be lower.

2. Euro (16.2%) and Chinese Yuan (6.4%) Help Reduce USD Dependence

• TZS 12.92 trillion in Euro debt provides some diversification, but the Euro is still volatile against the Shilling.
• TZS 5.10 trillion in Chinese Yuan (CNY) debt reflects Tanzania’s strong infrastructure financing ties with China.
• The CNY is more stable than the USD, but if China tightens monetary policy, Tanzania’s loan repayment costs in TZS could rise.

Implication:
✅ Having some debt in Euros and Yuan reduces USD reliance.
⚠️ However, fluctuations in these currencies could still affect repayment costs.

3. Exchange Rate Movements Can Impact Tanzania’s Fiscal Position

• A weaker TZS will make debt servicing more expensive, reducing funds available for public services and development.
• If the TZS depreciates by 5-10%, the government may need to allocate an extra TZS 4-8 trillion annually for debt repayment.
• Foreign reserves (USD 5.5 billion) cover 4.5 months of imports, but if debt repayments rise, reserves could deplete faster.

Implication:
⚠️ Tanzania must generate more export revenue in USD, EUR, and CNY to ease repayment pressures.
✅ Stable foreign exchange reserves help offset currency risks, ensuring the country meets its obligations.

4. Policy Actions Needed to Reduce Exchange Rate Risks

✅ Increase Local Currency Borrowing: More TZS-denominated debt would protect Tanzania from forex fluctuations.
✅ Enhance Foreign Currency Reserves: A stronger reserve position would act as a buffer against currency swings.
✅ Diversify Export Earnings: More revenue from gold, tourism, and agriculture will help Tanzania repay debts in USD, EUR, and CNY without depleting reserves.
✅ Negotiate for More Concessional Loans: More multilateral funding in low-interest, long-term debt can reduce reliance on expensive commercial borrowing.

Final Takeaway

📌 67.8% of external debt is in USD (TZS 54.10 trillion), making Tanzania vulnerable to currency depreciation risks.
📌 Euro (16.2%) and Chinese Yuan (6.4%) provide diversification, but they also come with their own exchange rate risks.
📌 The government must carefully manage forex reserves and export revenue to avoid debt distress.

While Tanzania’s debt remains manageable, exchange rate volatility could create future repayment challenges if not addressed through strong fiscal management and export-driven economic growth

In December 2024, Tanzania’s external sector showed resilience, with total exports rising by 9.8% to USD 14.72 billion, driven by gold (USD 3.49 billion, +4.3%) and tourism (USD 3.10 billion, +15.1%). Meanwhile, total imports increased by 7.2% to USD 17.85 billion, with petroleum imports (USD 4.08 billion, +10.2%) remaining the largest contributor to trade costs. As a result, the trade deficit narrowed to USD 3.13 billion, improving Tanzania’s external position. Foreign reserves stood at USD 5.5 billion, covering 4.5 months of imports, ensuring currency stability. To sustain this progress, Tanzania must diversify exports, attract more FDI (USD 1.83 billion, +8.2%), and reduce reliance on imported petroleum​

Tanzania’s external sector performance in December 2024 reflected strong export growth, increased foreign exchange inflows, and a narrowing trade deficit, supported by higher commodity prices and improved tourism earnings. However, import growth and external debt obligations remained key challenges.

1. Balance of Payments (BoP) and Foreign Reserves

• Tanzania’s overall balance of payments recorded a deficit of USD 135.6 million, an improvement from a deficit of USD 287.1 million in November 2024.
• Foreign exchange reserves stood at USD 5.5 billion, covering 4.5 months of imports, aligning with EAC and SADC benchmarks.

Implication:
✅ Higher reserves provide a cushion against external shocks and currency depreciation.
⚠️ A persistent BoP deficit means Tanzania still relies on external borrowing and capital inflows to maintain reserves.

2. Exports Performance

Tanzania’s total exports of goods and services increased by 9.8% to USD 14.72 billion in the year ending December 2024, compared to USD 13.41 billion in December 2023.

Key Export Categories

Key Observations:

✅ Tourism earnings (USD 3.10 billion, up 15.1%) indicate a full post-pandemic recovery, supported by increased international arrivals.
✅ Gold remains Tanzania’s top export (USD 3.49 billion, 23.7% of total exports), benefiting from strong global prices.
⚠️ The export base is still concentrated in commodities, increasing vulnerability to price fluctuations.

3. Imports Performance

• Total imports increased by 7.2% to USD 17.85 billion, compared to USD 16.65 billion in December 2023.
• The increase was driven by higher demand for capital goods and intermediate goods, reflecting economic expansion.

Key Import Categories

Key Observations:

✅ Increased imports of machinery (USD 2.81 billion, +9.5%) and raw materials (USD 2.45 billion, +6.8%) suggest industrial expansion.
⚠️ High petroleum import costs (USD 4.08 billion, +10.2%) increase trade deficit risks, making energy diversification crucial.

4. Trade Balance and Current Account Deficit

• The trade deficit narrowed to USD 3.13 billion from USD 3.24 billion in December 2023, supported by strong export growth.
• The current account deficit improved to USD 2.08 billion, down from USD 2.36 billion in December 2023, reflecting better export performance and remittance inflows.

Implication:
✅ Narrowing deficits indicate improved external stability, reducing pressure on foreign reserves.
⚠️ The trade deficit remains large, requiring further efforts to boost export diversification.

5. Foreign Direct Investment (FDI) and Capital Flows

• FDI inflows increased by 8.2% to USD 1.83 billion, up from USD 1.69 billion in December 2023, driven by mining, energy, and telecom sectors.
• Portfolio investment inflows rose to USD 594.7 million, indicating increased investor confidence.
• Remittances from Tanzanians abroad reached USD 589.2 million, up 6.3% year-on-year.

Implication:
✅ Higher FDI supports long-term economic growth, while increased remittances help stabilize the current account.
⚠️ Reliance on capital inflows means external shocks (e.g., global interest rate changes) could impact Tanzania’s financial position.

Key Takeaways:

📌 Exports grew by 9.8% (USD 14.72 billion), led by gold (USD 3.49 billion) and tourism (USD 3.10 billion), reducing the trade deficit.
📌 Imports increased by 7.2% (USD 17.85 billion), mainly in petroleum (USD 4.08 billion) and machinery (USD 2.81 billion), reflecting industrial growth.
📌 Foreign reserves remain strong at USD 5.5 billion (4.5 months of imports), supporting exchange rate stability.
📌 FDI inflows (USD 1.83 billion) and remittances (USD 589.2 million) improved, enhancing external financial stability.

To further strengthen external sector resilience, Tanzania should expand non-traditional exports, attract more FDI, and promote energy diversification to reduce petroleum import costs​

The external sector performance for December 2024 provides key insights into trade, foreign reserves, capital flows, and economic stability

1. Tanzania’s Export Growth is Strong, But Still Reliant on Commodities

• Total exports increased by 9.8% to USD 14.72 billion, led by gold (USD 3.49 billion, +4.3%) and tourism (USD 3.10 billion, +15.1%).
• Agricultural exports such as cashew nuts (USD 0.98 billion, +12.5%) and tobacco (USD 0.79 billion, +11.4%) performed well, benefiting from higher global commodity prices.
• Manufactured goods exports rose by 8.7%, reaching USD 1.92 billion, reflecting growth in Tanzania’s industrial sector.

Implication:
✅ Strong export growth helped narrow the trade deficit, reducing external vulnerabilities.
⚠️ The export base is still commodity-driven (gold, cashew nuts, tobacco), making Tanzania vulnerable to price fluctuations.
🔹 Tanzania must diversify its exports beyond raw commodities by increasing value addition (e.g., processed agricultural goods and finished manufactured products).

2. Imports Growth Reflects Economic Expansion, But High Energy Costs Are a Concern

• Total imports rose by 7.2% to USD 17.85 billion, mainly due to higher demand for capital goods, industrial raw materials, and petroleum products.
• Petroleum imports increased by 10.2% to USD 4.08 billion, making up the largest share of imports.
• Machinery & equipment imports grew by 9.5% (USD 2.81 billion), reflecting investments in industrial and infrastructure projects.

Implication:
✅ Higher imports of machinery and industrial inputs suggest economic expansion and manufacturing growth.
⚠️ Heavy dependence on petroleum imports increases trade deficit risks, highlighting the need for energy diversification (e.g., renewable energy investment).

3. Trade Deficit is Narrowing, Improving Tanzania’s External Position

• The trade deficit narrowed to USD 3.13 billion, down from USD 3.24 billion in December 2023, due to strong export performance.
• The current account deficit improved to USD 2.08 billion, reflecting higher remittances, FDI inflows, and strong services exports (tourism).

Implication:
✅ The narrowing trade and current account deficits indicate improved economic resilience and reduced pressure on foreign reserves.
⚠️ Tanzania must continue promoting exports and attracting FDI to sustain this positive trend.

4. Foreign Exchange Reserves Remain Stable, Supporting Currency Stability

• Foreign exchange reserves stood at USD 5.5 billion, covering 4.5 months of imports, meeting EAC and SADC benchmarks.

Implication:
✅ Adequate reserves ensure Tanzania can manage external shocks (e.g., exchange rate volatility, rising global interest rates).
⚠️ Sustaining reserve levels requires continued export growth and careful debt management.

5. Increased FDI and Capital Inflows Boost External Stability

• Foreign Direct Investment (FDI) inflows increased by 8.2% to USD 1.83 billion, mainly in mining, energy, and telecommunications.
• Portfolio investment inflows reached USD 594.7 million, reflecting increased investor confidence in Tanzania’s economy.
• Remittances from Tanzanians abroad rose to USD 589.2 million (+6.3%), providing additional foreign exchange inflows.

Implication:
✅ FDI growth supports economic expansion and job creation, while rising remittances strengthen household incomes.
⚠️ Tanzania must continue improving its investment climate to attract long-term capital flows.

Key Takeaways and Policy Actions Needed

📌 Exports grew by 9.8%, narrowing the trade deficit, but reliance on commodities remains a risk.
📌 Imports rose by 7.2%, mainly in petroleum and machinery, supporting industrial expansion but increasing energy dependence.
📌 Foreign reserves remain strong at USD 5.5 billion (4.5 months of import cover), stabilizing exchange rate risks.
📌 FDI and remittances increased, strengthening Tanzania’s external financial position.

🔹 What Needs to Be Done?
✅ Diversify export products and markets to reduce commodity reliance.
✅ Expand energy investments to reduce petroleum import costs.
✅ Strengthen policies to attract FDI in manufacturing, agribusiness, and technology.
✅ Boost domestic industries to reduce import dependence.

Overall, Tanzania’s external sector performance in December 2024 shows resilience, but efforts to strengthen export diversification and reduce reliance on external borrowing are crucial for long-term stability​

Liquidity Trends, Government Borrowing, and Exchange Rate Movements

In December 2024, Tanzania’s financial markets showed notable shifts in liquidity, government borrowing, and currency performance. Interbank cash market rates fell to 7.41% from 8.06%, signaling improved liquidity among banks. The government securities market saw Treasury bill yields rise to 12.86%, reflecting higher borrowing costs. Meanwhile, the Tanzanian shilling appreciated by 9.3%, trading at TZS 2,420.84 per USD, supported by strong inflows from cashew nut, tobacco, and gold exports. These developments indicate a stable financial system, easing monetary conditions, and a strengthening currency, which could have mixed effects on borrowing costs, investment, and trade​

The financial market in Tanzania, as reported in the Bank of Tanzania’s Monthly Economic Review (January 2025), showed notable developments in the Government Securities Market, Interbank Cash Market, and Interbank Foreign Exchange Market during December 2024.

1. Government Securities Market

• The Bank of Tanzania conducted two Treasury bill auctions in December 2024, with a combined tender size of TZS 252.8 billion to support government budgetary needs.
• Total bids received amounted to TZS 239.5 billion, of which TZS 217.8 billion were successful.
• The weighted average yield (WAY) on Treasury bills increased to 12.86%, up from 12.68% in November 2024, indicating rising government borrowing costs.
• In the Treasury bond market:
  • The 10-year bond auction was canceled due to undersubscription.
  • The 20-year bond was in high demand, with total bids of TZS 244.9 billion, out of which TZS 211.9 billion were accepted.
  • The yield on the 20-year bond increased to 15.71% from 15.64%, reflecting higher investor expectations for returns​.

2. Interbank Cash Market (IBCM)

• The Interbank Cash Market plays a key role in distributing liquidity among banks.
• In December 2024, total transactions in the IBCM reached TZS 1,616.8 billion, slightly lower than TZS 1,650 billion in November 2024.
• The overnight segment represented 12% of total market turnover, while 7-day transactions accounted for 43.9%.
• The overall IBCM interest rate decreased to 7.41%, down from 8.06% in November 2024, reflecting improved liquidity conditions in the banking sector​.

3. Interbank Foreign Exchange Market (IFEM)

• The foreign exchange market showed a significant improvement in liquidity, driven by increased foreign exchange inflows from exports of cashew nuts, tobacco, mining, and tourism receipts.
• Total transactions in IFEM reached USD 95.7 million in December 2024, up from USD 17.1 million in December 2023, showing a more active market.
• The Bank of Tanzania intervened, purchasing USD 0.5 million and selling USD 2 million.
• The Tanzanian shilling appreciated significantly, reversing the depreciation trend observed in previous months:
  • The exchange rate strengthened to TZS 2,420.84 per USD, compared to TZS 2,659.03 per USD in November 2024, representing a monthly appreciation of 9.3%.
  • On an annual basis, the shilling appreciated by 3.8%, a notable improvement from the 6.3% depreciation recorded in the previous month​.

Key Takeaways:

• The government securities market saw increased yields, indicating rising government borrowing costs and investor demand for higher returns.
• The interbank cash market experienced lower interest rates, suggesting improved liquidity and reduced short-term borrowing costs for banks.
• The foreign exchange market saw strong inflows, leading to Tanzania Shilling appreciation by 9.3% in one month, supported by rising exports and monetary policy adjustments.

The developments in Tanzania's financial markets provide key insights into liquidity conditions, investor sentiment, and monetary policy effectiveness

1. Government Securities Market: Rising Yields & Demand Shift

• The increase in Treasury bill yields to 12.86% (from 12.68%) and 20-year bond yields to 15.71% (from 15.64%) suggests that investors demand higher returns, possibly due to:
  • Perceived risk of government debt.
  • Tighter liquidity conditions in the market.
  • Expectations of inflation or monetary tightening in the future.
• The 10-year bond cancellation due to low demand signals that investors prefer shorter or longer maturities, possibly due to uncertainties over medium-term economic policies.

Implication: The government may face higher borrowing costs, affecting fiscal planning and debt sustainability.

2. Interbank Cash Market (IBCM): Improved Liquidity, Lower Rates

• The IBCM interest rate fell to 7.41% (from 8.06%), and total transactions reached TZS 1,616.8 billion, indicating:
  • Improved liquidity in the banking system.
  • More confidence among banks to lend to each other.
• The fact that 7-day transactions accounted for 43.9% of turnover shows that banks are shifting towards slightly longer borrowing periods rather than relying solely on overnight liquidity.

Implication: The banking system has adequate liquidity, reducing pressure on short-term funding costs and supporting credit expansion to businesses and individuals.

3. Interbank Foreign Exchange Market (IFEM): Stronger Shilling & Increased Transactions

• The shilling appreciated by 9.3% in one month, trading at TZS 2,420.84 per USD (from TZS 2,659.03 in November 2024).
• Foreign exchange transactions increased significantly to USD 95.7 million, up from USD 17.1 million in December 2023, driven by:
  • Higher export earnings from cashew nuts, tobacco, and gold.
  • Tourism inflows and mining revenues.
  • Easing global interest rates, which reduced capital outflows.

Implication: A stronger shilling reduces import costs, helping to contain inflation, but could make exports less competitive if the trend continues.

Overall Takeaway:

1. Monetary policy is effectively stabilizing liquidity, as reflected in lower interbank rates and an active foreign exchange market.
2. The government is facing rising borrowing costs, which may impact fiscal planning.
3. The shilling is strengthening, showing strong foreign exchange inflows, but policymakers should balance this to avoid hurting exports.

These trends suggest that Tanzania’s financial markets are active and responsive to policy changes, investor sentiment, and external economic factors​

Implications for Credit, Savings, and Economic Growth

In December 2024, Tanzania’s interest rates showed mixed movements, reflecting shifts in monetary policy and banking sector dynamics. The overall lending rate declined to 15.17% from 15.67%, making credit more affordable, while deposit rates rose to 8.33% from 8.18%, incentivizing savings. The spread between short-term lending and deposit rates narrowed to 6.12 percentage points, down from 7.02% in December 2023, signaling increased banking sector efficiency. These trends suggest a pro-growth monetary policy stance, aimed at boosting investment and economic activity while maintaining financial stability​

The interest rates in Tanzania, as reported in the Bank of Tanzania's Monthly Economic Review (January 2025), are as follows:

Lending and Deposit Interest Rates (December 2024)

1. Overall Lending Rate:
   • 15.17%, down from 15.67% in November 2024.
2. Negotiated Lending Rate:
   • 12.83%, up from 12.77% in November 2024.
3. Overall Deposit Rate:
   • 8.33%, up from 8.18% in November 2024.
4. Negotiated Deposit Rate:
   • 10.39%, up from 10.14% in November 2024.
5. Short-term Lending Rate (Up to 1 Year):
   • 15.74%, compared to 15.56% in November 2024.
6. Savings Deposit Rate:
   • 2.84%, up from 2.69% in November 2024.
7. 12-Month Time Deposit Rate:
   • 9.62%, slightly lower than 9.63% in November 2024.

Interest Rate Spread

• The spread between short-term lending and deposit rates narrowed to 6.12 percentage points from 7.02 percentage points in December 2023.

The changes in interest rates reflect key economic and monetary policy dynamics in Tanzania

1. Declining Lending Rates (15.17% from 15.67%)

• A lower lending rate means credit is becoming cheaper, making it easier for businesses and individuals to borrow.
• This suggests monetary easing, where the Bank of Tanzania (BoT) is supporting economic growth by making loans more accessible.
• The increase in negotiated lending rates (12.83%), however, indicates that some banks are charging higher rates based on risk assessment, suggesting credit risk concerns in certain sectors.

2. Rising Deposit Rates (8.33% from 8.18%)

• Higher deposit rates encourage savings, helping banks to attract more funds.
• The increase in negotiated deposit rates (10.39%) suggests that banks are competing more for deposits, possibly due to:
  • Higher demand for liquidity.
  • The need to fund loan growth.

3. Narrowing Interest Rate Spread (6.12% from 7.02%)

• A lower spread means the difference between lending and deposit rates is shrinking, which usually implies:
  • More efficiency in the banking system.
  • Increased competition among banks, forcing them to offer better rates to depositors while reducing borrowing costs.

4. Implications for the Economy

• Encourages borrowing: More businesses and individuals can take loans for investment and consumption.
• Supports economic growth: Easier access to credit can drive investments, job creation, and productivity.
• Sustains inflation stability: If lending is growing without excessive inflation, the economy can expand sustainably.
• Indicates liquidity adjustments: BoT is managing liquidity by influencing rates, ensuring banks have enough funds to lend.

Overall Takeaway

The trend suggests a pro-growth monetary policy stance, with lower borrowing costs stimulating economic activities, while banks adjust their deposit rates to maintain liquidity and profitability. However, higher negotiated lending rates in some cases suggest that banks remain cautious about credit risks in certain sectors.

Between 2013 and 2024, Tanzania's economic growth showcased sectoral resilience and dynamism, with standout performances in ICT (13.2% Q4 2020), Construction (28.8% Q4 2016), and Agriculture (14.7% Q2 2016). Despite global challenges like COVID-19, which saw Accommodation & Restaurants plummet by 25.1% (Q2 2020), recovery has been robust across industries. This analysis highlights key drivers, sectoral contributions, and the evolving economic landscape underpinning Tanzania's sustainable growth ambitions.

Pre-2020 and post-2020):

Agriculture

• Overall Average Growth Rate: 5.2%
• Pre-2020 Average (2013Q1–2019Q4): 5.5%
• Post-2020 Average (2020Q1–2024Q3): 4.7%
• Key Observations: Growth was steady pre-2020, but post-2020, the growth rate declined slightly, possibly reflecting challenges from global economic shocks like the pandemic.

Industry and Construction

Mining and Quarrying

• Overall Average Growth Rate: 7.7%
• Pre-2020 Average: 10.6%
• Post-2020 Average: 4.3%
• Key Observations: High volatility was observed, with peaks such as 27.2% in 2015Q4, but significant dips post-2020 indicate reduced activity or market challenges.

Manufacturing

• Overall Average Growth Rate: 6.7%
• Pre-2020 Average: 7.8%
• Post-2020 Average: 4.5%
• Key Observations: Manufacturing experienced robust growth pre-2020, driven by infrastructure and industrialization programs, but faced a notable decline post-2020.

Electricity

• Overall Average Growth Rate: 8.5%
• Pre-2020 Average: 8.7%
• Post-2020 Average: 8.2%
• Key Observations: A relatively stable sector with consistent growth, though marked by occasional negative quarters, e.g., -10.2% in 2015Q3.

Water

• Overall Average Growth Rate: 5.4%
• Pre-2020 Average: 6.4%
• Post-2020 Average: 3.9%
• Key Observations: Moderate but fluctuating growth; stronger performance pre-2020 with occasional contractions, e.g., -7.1% in 2013Q3.

Construction

• Overall Average Growth Rate: 12.5%
• Pre-2020 Average: 14.8%
• Post-2020 Average: 8.1%
• Key Observations: One of the fastest-growing sectors pre-2020 due to infrastructure projects but faced a slowdown post-2020.

Services

Trade and Repair

• Overall Average Growth Rate: 5.0%
• Pre-2020 Average: 6.2%
• Post-2020 Average: 3.4%
• Key Observations: Post-2020 recovery has been slow after contractions in sectors dependent on consumer spending.

Accommodation and Restaurant

• Overall Average Growth Rate: 3.5%
• Pre-2020 Average: 4.3%
• Post-2020 Average: 2.2%
• Key Observations: This sector was severely affected by the pandemic, especially in 2020, with -25.1% in 2020Q2.

Transport and Storage

• Overall Average Growth Rate: 7.5%
• Pre-2020 Average: 8.4%
• Post-2020 Average: 5.7%
• Key Observations: A steady performer but saw reduced growth post-2020 due to reduced logistics and mobility.

Information and Communication

• Overall Average Growth Rate: 8.8%
• Pre-2020 Average: 9.1%
• Post-2020 Average: 8.4%
• Key Observations: Growth was relatively resilient, benefiting from digital adoption during and post-pandemic.

Financial and Insurance

• Overall Average Growth Rate: 5.6%
• Pre-2020 Average: 6.0%
• Post-2020 Average: 5.0%
• Key Observations: Modest growth with signs of recovery in post-pandemic years.

Insights

1. High Growth Sectors (2013-2024): Construction (12.5%), Information and Communication (8.8%), and Mining and Quarrying (7.7%).
2. Pandemic Impact: Significant slowdowns in sectors like Manufacturing, Trade, Accommodation, and Construction.
3. Resilient Sectors: Information and Communication, Financial Services, and Electricity showed consistent growth despite economic challenges.

GDP growth rates by activity at constant 2015 prices reflects the economic performance of various sectors over time

1. Sectoral Contribution and Volatility

• Agriculture: Generally steady growth, with an average growth rate of around 4–6%. Occasional spikes (e.g., Q2 2016 at 14.7%) reflect good harvests or favorable conditions. Declines or low growth (e.g., Q4 2022 at 1.9%) suggest challenges like climate effects.
• Industry and Construction:
  • Mining and Quarrying: Highly volatile, with significant spikes (e.g., Q4 2015 at 27.2%) and contractions (e.g., Q1 2013 at -11.5%). This indicates sensitivity to global commodity prices and policy changes.
  • Manufacturing: A relatively stable upward trend, with growth clustering around 5–8%. Spikes (e.g., Q3 2016 at 13.7%) indicate periods of high industrial activity or exports.
  • Construction: Substantial growth (e.g., Q4 2016 at 28.8%) tied to infrastructure development projects, reflecting government investment. Recent years (e.g., 2022–2024) show a slowdown, averaging around 3–5%.

2. Services Sector Trends

• Trade and Repair: A cyclical trend with growth peaking around 9–12% in robust periods. Declines (e.g., Q2 2020 at -0.2%) likely reflect the COVID-19 impact on commerce.
• Accommodation & Restaurants: Hit hard during COVID-19 (e.g., Q2 2020 at -25.1%) but recovering sharply in later years (e.g., Q1 2021 at 10.1%). This reflects the sensitivity of tourism-related services to external shocks.
• Transport and Storage: Moderate, steady growth (average 5–9%), with occasional dips, possibly tied to trade volumes or logistics challenges.
• Information and Communication: Consistently high growth (e.g., averaging 8–13%), underscoring the rapid digitalization and expansion of mobile services.
• Financial and Insurance Services: Volatile, with significant growth after downturns (e.g., 2021–2023 averages 9–12%). This may indicate policy-driven financial inclusion efforts or global financial trends.

3. Public Sector Influence

• Public Administration: Sustained growth averaging 5–10%, with some slowdowns, possibly reflecting government budget adjustments or economic shocks.
• Professional and Technical Activities: Strong early growth, tapering off over the years, possibly as the sector matures.

4. Key Observations

• COVID-19 Impact: Sharp contractions are visible across sectors (e.g., Q2 2020), followed by recovery. The tourism and hospitality sectors faced the largest impacts.
• Infrastructure Development: Growth in construction and manufacturing aligns with government infrastructure projects and industrialization efforts.
• Digital Transformation: Information and communication growth highlights the importance of the ICT sector as a driver of modernization.
• Agricultural Stability: Agriculture remains resilient but vulnerable to climate and external market conditions.

Implications

• Diversification: The reliance on specific sectors like mining or ICT indicates a need for broader economic diversification to reduce vulnerability to shocks.
• Policy Focus: Investments in infrastructure, digital technology, and tourism can drive sustained growth.
• Resilience Building: Agriculture and trade require resilience strategies to mitigate risks from climate and global trade disruptions.

The average GDP growth rates for Tanzania across selected periods

As of January 20, 2025, Tanzania's total outstanding credit from the International Monetary Fund (IMF) stood at $1.01 billion. This figure, unchanged from December 31, 2024, reflects the country's measured reliance on external financing to support its economic needs. Compared to neighboring Kenya, with $3.02 billion outstanding, and Uganda, with $992.75 million, Tanzania’s credit position highlights a balanced fiscal approach aimed at fostering economic stability and sustainable growth in the East African region.

Tanzania's Position:

• Total IMF Credit Outstanding (as of 12/31/2024): $1,009,260,000
• Total Disbursements (1/1/2025 - 1/20/2025): $0
• Total Repayments (1/1/2025 - 1/20/2025): $0
• Outstanding as of 1/20/2025: $1,009,260,000

Kenya's Position:

• Total IMF Credit Outstanding (as of 12/31/2024): $3,022,009,900
• Total Disbursements (1/1/2025 - 1/20/2025): $0
• Total Repayments (1/1/2025 - 1/20/2025): $0
• Outstanding as of 1/20/2025: $3,022,009,900

Uganda's Position:

• Total IMF Credit Outstanding (as of 12/31/2024): $992,750,000
• Total Disbursements (1/1/2025 - 1/20/2025): $0
• Total Repayments (1/1/2025 - 1/20/2025): $0
• Outstanding as of 1/20/2025: $992,750,000

Key Comparisons

1. Tanzania vs. Kenya:
   • Kenya has significantly higher IMF credit outstanding ($3.02 billion) compared to Tanzania ($1.01 billion). This indicates Kenya has relied more on IMF resources for financial support, which could reflect larger financing needs or higher borrowing capacity.
2. Tanzania vs. Uganda:
   • Tanzania's IMF credit outstanding ($1.01 billion) is slightly higher than Uganda's ($992.75 million). Both countries are at a similar level of reliance on IMF financing.
3. Regional Context:
   • Among the three countries, Kenya stands out as the largest IMF borrower, with credit nearly three times that of Tanzania and Uganda. This could reflect Kenya's economic structure, debt needs, or its position as a major regional player in East Africa.

Insights for Tanzania's Position:

• Tanzania's reliance on IMF credit is moderate in the East African context.
• Its outstanding credit is closer to Uganda's, highlighting comparable economic management and borrowing patterns.
• Kenya's higher credit use might stem from its broader infrastructure investments and economic challenges requiring external financing.

Tanzania's focus on maintaining a balanced IMF credit level could indicate careful financial management, prioritizing sustainable borrowing practices.

The comparison of Tanzania's IMF credit outstanding with Kenya and Uganda provides key insights into their economic positioning, financial reliance, and fiscal management

1. Financial Management:

• Tanzania: Moderate reliance on IMF credit compared to Kenya but slightly higher than Uganda. This suggests Tanzania is cautious with borrowing, maintaining manageable debt levels.
• Kenya: Heavy reliance on IMF credit indicates greater financial needs or challenges, such as large infrastructure projects or fiscal deficits.
• Uganda: Similar borrowing levels to Tanzania suggest a comparable approach to debt sustainability.

2. Economic Stability and Needs:

• Tanzania: The credit level reflects a balanced approach to borrowing, likely aligning with its steady economic growth and efforts to manage public debt responsibly.
• Kenya: High IMF credit indicates significant economic demands, possibly tied to ambitious projects, budgetary pressures, or addressing external shocks.
• Uganda: Close to Tanzania in borrowing, suggesting similar economic dynamics and financial planning priorities.

3. Regional Leadership and Growth Ambitions:

• Tanzania vs. Kenya: Kenya’s larger IMF credit highlights its role as a regional leader, undertaking substantial investments. Tanzania, though ambitious, opts for more measured borrowing.
• Tanzania vs. Uganda: Both exhibit modest borrowing relative to Kenya, suggesting a shared emphasis on sustainable growth without over-reliance on external funding.

Overall Implication for Tanzania:

Tanzania’s position reflects:

• Prudence in fiscal management.
• Moderate reliance on external credit, showcasing resilience.
• A balanced approach that prioritizes sustainable development without excessive debt.

This indicates Tanzania is well-positioned to maintain economic stability while managing its obligations in the East African context.

Top 10 African Countries with the Highest IMF Outstanding Credit (as of January 20, 2025)

1. Egypt: $8.67 billion
2. South Africa: $1.14 billion
3. Kenya: $3.02 billion
4. Angola: $2.90 billion
5. Ghana: $2.51 billion
6. Côte d'Ivoire: $2.74 billion
7. Ethiopia: $1.31 billion
8. Nigeria: $613.63 million
9. Rwanda: $610.76 million
10. Mozambique: $553.80 million

This ranking is based on IMF's credit outstanding records and showcases countries with substantial financial engagements for economic support or development initiatives.

Tanzania's mobile money sector has grown remarkably, with subscriptions rising from 32.27 million in 2020 to 61.88 million in 2024, a nearly 92% increase over five years. In 2024 alone, mobile money platforms processed over 3.74 billion transactions, highlighting their central role in daily financial activities. Market leaders like M-Pesa (38.9% share), Airtel Money (30.7%), and Mixx by Yas (19%) drive competition, while rural connectivity continues to expand access. This growth underscores mobile money's transformative impact on financial inclusion and its role in fostering economic participation across Tanzania.

Mobile Money Services in Tanzania: Trends and Insights

1. Mobile Money Transactions Over Five Years (2020–2024)

• Transaction Volumes:
  • 2020: 3.41 billion transactions
  • 2021: 3.75 billion (+9.4%)
  • 2022: 4.20 billion (+12%)
  • 2023: 5.27 billion (+25%)
  • 2024: 3.74 billion (data for the full year not available yet; reflects up to Q4)​.
• The steady growth in transaction volumes highlights the increasing reliance on mobile money for daily transactions and the efficiency of the mobile money ecosystem in Tanzania.

2. Mobile Money Subscriptions Over Five Years (2020–2024)

• Subscription Numbers:
  • 2020: 32.27 million
  • 2021: 35.29 million (+9.4%)
  • 2022: 40.95 million (+16%)
  • 2023: 52.87 million (+29%)
  • 2024: 61.88 million (+17% compared to 2023)​.
• The consistent growth in subscriptions indicates mobile money's critical role in financial inclusion, bringing banking services to underserved and unbanked populations.

3. Key Market Players and Market Share (December 2024)

• M-Pesa (Vodacom): 38.9% of mobile money accounts, maintaining its leadership position.
• Airtel Money: 30.7%, reflecting strong market penetration.
• Mixx by Yas: 19%, emerging as a key competitor.
• HaloPesa (Halotel): 9%.
• T-Pesa (TTCL): 2.4%.
• Azam Pesa: 0.1%, with a niche presence​.

4. Volume of Transactions in Q4 2024

• Total mobile money transactions for the quarter reached 63.2 million, representing a growth from 60.8 million in Q3 2024 (+3.95%).
• Airtel Money, M-Pesa, and Mixx by Yas were the main contributors to the growth, indicating fierce competition and innovation within the sector.

5. Future Opportunities and Challenges

• Opportunities:
  • Expanding mobile money access in rural areas where banking services are scarce.
  • Leveraging the growing subscription base for advanced services like savings, insurance, and microloans.
• Challenges:
  • Maintaining affordability for transactions to cater to lower-income populations.
  • Addressing cybersecurity concerns and fraud prevention as the ecosystem grows.

Tanzania’s mobile money services have grown from 32.27 million subscriptions in 2020 to 61.88 million in 2024, facilitating over 3.74 billion transactions annually. This growth underscores its critical role in financial inclusion, fostering economic participation across demographics and regions. With competition driving innovation and adoption, mobile money is poised to remain a cornerstone of Tanzania’s digital economy.

The analysis of mobile money services in Tanzania reveals several critical insights about the sector's growth, impact, and potential

1. Financial Inclusion is Increasing

• Rising Subscriptions: The number of mobile money accounts surged from 32.27 million in 2020 to 61.88 million in 2024, reflecting greater access to financial services, especially in areas with limited traditional banking infrastructure.
• Transaction Volumes: With over 3.74 billion transactions annually in 2024, mobile money has become an essential tool for daily financial activities, from personal transfers to bill payments.

2. Dominance of Key Players

• Market Leaders: Providers like M-Pesa (38.9% market share), Airtel Money (30.7%), and Mixx by Yas (19%) dominate the sector, creating competitive dynamics that drive innovation and service improvement.
• Emerging Players: Smaller providers like HaloPesa and T-Pesa have carved out niches but face stiff competition from the dominant players.

3. Growth Driven by Accessibility

• Adoption in Underserved Areas: Mobile money bridges the gap in rural and semi-urban areas where access to traditional banking services is scarce, demonstrating its role in financial inclusion.
• Affordability: Mobile money services are cost-effective, enabling more people to participate in the digital financial ecosystem.

4. Significant Economic Role

• Mobile money transactions now serve as a backbone for Tanzania's financial ecosystem, enabling personal, business, and government payments. This growth has reduced reliance on cash and supported economic formalization.

5. Opportunities and Challenges

• Opportunities:
  • Expanding mobile money services to offer additional products such as savings accounts, insurance, and loans.
  • Strengthening rural connectivity to ensure equitable access across all regions.
• Challenges:
  • Addressing cybersecurity risks as transaction volumes and user bases grow.
  • Sustaining affordability and competitive pricing to cater to low-income users.

Implications

Tanzania’s mobile money sector is a success story of digital and financial transformation. Its growth highlights the power of technology to foster financial inclusion and economic participation. However, sustained growth will require targeted investments in infrastructure, cybersecurity, and innovative services to address challenges and unlock the sector's full potential.

Tanzania’s internet landscape has experienced tremendous growth, with subscriptions surging from 23.1 million in 2019 to 86.8 million in 2024, reflecting a remarkable expansion of over 275% in five years. Mobile internet dominates the sector, accounting for 47.9 million subscriptions, supported by the rollout of 4G (88% coverage) and emerging 5G (20% coverage) technologies. Affordable data pricing, averaging Tsh 9.35 per MB, has fueled adoption, while urban centers like Dar es Salaam lead in connectivity. However, with 22.3 million users still relying on 2G, challenges persist in extending advanced internet access to rural areas, creating significant opportunities for infrastructure development and digital inclusion.

Internet Services in Tanzania

1. Internet Usage Trends (2019-2024)

• Growth in Internet Subscriptions:
  • 2019: 23.1 million subscriptions
  • 2020: 32.3 million (+39.8%)
  • 2021: 40.9 million (+26.6%)
  • 2022: 52.8 million (+29.1%)
  • 2023: 61.8 million (+17.1%)
  • 2024: 86.8 million (+16% compared to 2023) **​.
• Mobile internet leads the market with 47.9 million subscriptions as of December 2024, while fixed internet subscriptions are minimal but steadily growing.

2. Internet Subscriptions by Technology (2024)

• Mobile Internet: 25.6 million subscriptions (53% of total users).
• 2G Connections: 22.3 million subscriptions, showing persistence despite newer technologies.
• Fiber Connections:
  • Fiber to the Home (FTTH): 71,661 subscriptions.
  • Fiber to the Office (FTTO): 11,540 subscriptions.
• The growth reflects investments in 4G (88% coverage) and 5G (20% coverage)​.

3. Cost of Internet Services by Provider (December 2024)

The following is a breakdown of data service costs in Tanzanian Shillings (Tsh) for 1 Megabyte (MB) outside bundled packages:

• Airtel: Tsh 9.35/MB
• Halotel: Tsh 9.35/MB
• Vodacom: Tsh 9.35/MB
• TTCL: Tsh 9.35/MB
• Yas: Tsh 9.35/MB

The average cost of data across all service providers is Tsh 9.35 per MB, indicating uniform pricing due to market regulation.

• In bundled packages, data costs drop significantly. For example:
  • Within Bundles: Prices as low as Tsh 2.16 per MB​.

4. Market Share in Internet Services

• Vodacom leads with 34% market share, followed by Airtel (30%) and Halotel (23%).
• Fixed internet services are dominated by smaller providers like TTCL and private operators, but their overall market share remains minimal compared to mobile services​.

Insights and Trends:

• Affordable Internet Growth: The average price for bundled data is significantly cheaper, which has driven the adoption of mobile internet.
• Technology Expansion: Investments in 4G and 5G have enhanced data speeds and accessibility, but 2G remains relevant for rural areas.
• Opportunities: Expanding fiber connections and lowering device costs can further boost digital access.

The analysis of Tanzania's internet services and trends key insights into the state of connectivity and its implications

1. Significant Growth in Internet Access

• Consistent Expansion: Over the last five years, internet subscriptions have grown from 23.1 million in 2019 to 86.8 million in 2024, driven by mobile internet, infrastructure investments, and increased affordability.
• Technology Uptake: Mobile internet dominates, with 53% of users relying on mobile data, reflecting its affordability and accessibility, especially in rural areas.

2. Affordability and Accessibility

• Uniform Pricing: Data costs average Tsh 9.35/MB across providers, with much cheaper rates in bundled packages (as low as Tsh 2.16/MB). This affordability has contributed to the adoption of internet services among diverse demographics.
• Broad Coverage: The rollout of 4G (88% coverage) and growing 5G (20% coverage) reflects a strong push to modernize infrastructure.

3. Urban-Rural Divide

• Persistent 2G Usage: The high number of 2G users (22.3 million) highlights challenges in reaching rural areas with advanced technologies like 4G and 5G.
• Fiber Gaps: Limited fiber connections (FTTH: 71,661 and FTTO: 11,540 subscriptions) suggest that fixed internet infrastructure is still underdeveloped, primarily catering to urban centers and businesses.

4. Competitive Market Dynamics

• Market Concentration: Vodacom (34%), Airtel (30%), and Halotel (23%) dominate the internet market, ensuring competitive pricing and service improvements.
• Innovation Opportunities: The uniform pricing among providers reflects regulatory stability but leaves room for differentiation in services, such as quality, speed, and customer experience.

5. Future Opportunities and Challenges

• Opportunities:
  • Expanding fiber infrastructure and improving rural access to advanced technologies like 4G and 5G.
  • Leveraging affordable bundled data to drive digital services adoption (e.g., e-commerce, mobile banking, and e-learning).
• Challenges:
  • Bridging the rural-urban gap in technology adoption.
  • Ensuring equitable access for underserved regions.

Overall Implications

Tanzania's internet sector reflects a robust trajectory of growth, driven by affordability and mobile technology. However, the urban-rural divide and limited fixed internet penetration remain critical areas to address. The continued investment in infrastructure and innovative service offerings can position Tanzania as a digital leader in the region.

As of December 2024, Tanzania's communication sector has experienced remarkable growth, with 86.8 million SIM cards registered, reflecting a 7.7% increase from September 2024. Internet subscriptions reached 48 million, marking a 16% growth in just one quarter, driven by the widespread use of mobile internet, which accounts for 47.9 million subscriptions. Advanced technologies like 4G (88% coverage) and 5G (20% coverage) highlight significant infrastructure investments. Despite the rise of smartphones (36% penetration), feature phones dominate with 87%. These trends underscore Tanzania's progress in bridging the digital divide while revealing opportunities for enhanced connectivity in underserved regions.

Mobile and Internet Communication in Tanzania (as of December 2024)

1. Mobile SIM Cards
   • Total SIM cards (both P2P and M2M): Increased from 80.7 million in September 2024 to 86.8 million in December 2024, representing a growth of 7.7%.
   • Distribution by Service Providers:
     • Vodacom: 31%
     • Airtel: 30%
     • Halotel: 23%
     • Yas: 14%
     • TTCL: 2%​.
2. Top Regions by Number of SIM Cards:
   • Dar es Salaam: 15.98 million
   • Mwanza: 5.75 million
   • Arusha: 5.23 million
   • Mbeya: 4.99 million
   • Dodoma: 4.64 million​.
3. Trends Over Five Years:
   • SIM cards have grown from 51.3 million in 2020 to 86.8 million in 2024​.
4. Internet Usage:
   • Internet subscriptions: Grew by 16%, from 41.4 million in September 2024 to 48 million in December 2024.
   • Mobile Internet leads the usage, with 47.9 million subscriptions. Vodacom dominates this segment with a 34% market share, followed by Airtel (30%) and Halotel (23%)​.
5. Infrastructure:
   • Mobile network towers: Total 8,899, with Dar es Salaam hosting 1,214 towers.
   • Network technology coverage:
     • 2G: 98.2%
     • 3G: 91%
     • 4G: 88%
     • 5G: 20%​.
6. Devices Connected to Networks:
   • Feature phones: 87.39% penetration.
   • Smartphones: 35.99% penetration​.

Key insights about Tanzania's mobile and internet communication sector

1. Growth in Connectivity

• Rapid Expansion: The steady increase in the number of SIM cards (from 51.3 million in 2020 to 86.8 million in 2024) reflects robust sector growth. This is likely driven by competitive pricing, increased mobile coverage, and a growing population adopting mobile services.
• Internet Penetration: The rise in internet subscriptions (16% growth in just one quarter) highlights the accelerating digital adoption across Tanzania, with mobile internet being the dominant mode of access.

2. Regional Disparities

• Dar es Salaam's Dominance: The high number of SIM cards (15.98 million) and towers (1,214) in Dar es Salaam emphasizes its position as the country's economic and technological hub.
• Emerging Urban Centers: Regions like Mwanza and Arusha also demonstrate significant connectivity levels, suggesting ongoing urbanization and digital engagement outside the capital.

3. Technology Adoption

• Smartphones on the Rise: With a penetration rate of 35.99%, smartphones are becoming increasingly accessible, paving the way for broader internet usage and digital services.
• Legacy Technology Persistence: Feature phones still dominate (87.39% penetration), showing that a large segment of the population relies on basic devices, possibly due to affordability and digital literacy gaps.

4. Competition and Market Dynamics

• Service Providers' Market Share: Vodacom and Airtel lead the market, but competition remains robust with significant contributions from Halotel and Yas. This diversity fosters competitive pricing and innovation.
• Infrastructure Investments: The coverage of advanced technologies like 4G (88%) and growing 5G (20%) adoption reflect increased investments in modern infrastructure.

5. Opportunities and Challenges

• Opportunities:
  • Growing smartphone penetration and internet access can support digital government services, e-commerce, and mobile banking.
  • Regions with lower penetration (e.g., rural areas) present opportunities for targeted infrastructure expansion.
• Challenges:
  • Affordability of smartphones and internet access remains a barrier for many.
  • Urban-rural disparities in coverage and infrastructure highlight the need for inclusive policies.

Tanzania’s implied PPP conversion rate has steadily risen from 9.803 in 1980 to a projected 888.053 in 2029, reflecting changes in currency value and purchasing power over the decades. Compared to its regional peers, Tanzania demonstrates moderate economic stability, outperforming countries like Burundi (PPP of 1,727.92 in 2029) and Uganda (1,422.54 in 2029) but trailing Kenya’s more stable performance (51.46 in 2029). The rising PPP rate highlights the Tanzanian shilling’s depreciation, driven by inflation and macroeconomic adjustments, particularly during the 1980s and 1990s reforms. However, recent stabilization trends post-2020 suggest improved economic governance, positioning Tanzania as a middle performer in East Africa with significant potential for growth through sustained reforms and regional integration.

Key Observations for Tanzania (1980–2029):

1. Historical Trends:
   • Tanzania's PPP conversion rate increased steadily from 9.803 (1980) to 888.053 (2029).
   • This growth indicates the depreciation of the Tanzanian shilling relative to the international dollar, reflecting inflationary pressures and currency value changes.
2. Regional Comparison:
   • Burundi: Experienced higher and more volatile PPP conversion rates, peaking at 1727.92 (2029), showing significant depreciation compared to Tanzania.
   • Kenya: Maintained much lower and stable rates, rising from 4.603 (1980) to 51.457 (2029), reflecting stronger currency stability.
   • Rwanda: Showed consistent growth in PPP conversion rates, starting from 64.749 (1980) and reaching 410.284 (2029). While higher than Tanzania in the earlier years, it stabilized below Tanzania in later years.
   • Uganda: Experienced rapid increases from 0.479 (1980) to 1422.537 (2029), showing significant depreciation over time, surpassing Tanzania's rate.
3. Position in East Africa:
   • Tanzania’s PPP rate places it in the middle range within East Africa:
     • Lower stability than Kenya.
     • Better currency performance than Burundi and Uganda.
4. Notable Periods:
   • 1986–1995: Significant increases in Tanzania's PPP rate, reflecting the impact of economic reforms and structural adjustment programs.
   • 2006–2010: Higher rate increases, possibly linked to global financial crises and local inflationary pressures.
   • 2020–2029: A gradual stabilization, signaling improved macroeconomic management and currency stability.

Insights into Tanzania's Economic Position:

1. Relative Stability: Tanzania's performance is better than some neighbors like Uganda and Burundi but falls short compared to Kenya, which has a historically more stable economy and currency.
2. Inflationary Impacts: The rise in PPP rates correlates with inflation and economic challenges, including high public debt and reliance on imports.
3. Policy Implications:
   • Tanzania's economic policies during periods of stabilization (e.g., post-2017) have likely supported improved currency valuation.
   • Investments in key sectors like agriculture, mining, and manufacturing may enhance future stability.
4. Future Outlook:
   • If Tanzania sustains its growth trajectory and maintains macroeconomic reforms, its PPP rate could stabilize further.
   • Integration into regional economic blocs (e.g., EAC) and trade partnerships will enhance competitiveness relative to its peers.

Comparative Summary (2029 Projections):

Tanzania's performance reflects a mix of growth potential and challenges in currency stability. Regional cooperation and investment reforms are critical for enhancing its competitiveness.

The PPP conversion rate tells us several important things about Tanzania and its economic positioning compared to other East African countries

1. Economic Growth and Currency Stability

• Trend in PPP Rates: The steady increase in Tanzania’s implied PPP rate shows currency depreciation over time due to inflation and economic growth challenges.
• A higher PPP rate indicates that more Tanzanian shillings are needed to purchase the same goods and services, suggesting weaker currency stability compared to countries like Kenya.
• However, Tanzania has shown signs of stabilization in recent years, particularly after 2020, indicating improved macroeconomic management.

2. Regional Competitiveness

• Comparison with Kenya: Kenya's consistently lower PPP rate reflects a more stable and stronger economy with controlled inflation and higher productivity. This suggests Kenya has been better at maintaining monetary and fiscal stability.
• Comparison with Burundi and Uganda: Tanzania performs better than these countries, which have experienced more significant economic challenges, including hyperinflation (Burundi) and volatile exchange rates (Uganda).
• Middle Performer: Tanzania occupies a middle ground in East Africa, reflecting moderate economic performance but with room for improvement to match Kenya’s stability.

3. Impact of Economic Reforms

• During the 1980s and 1990s, Tanzania underwent significant economic reforms, including structural adjustment programs. These caused sharp increases in the PPP rate as the economy adjusted to market liberalization and inflationary pressures.
• More recently, infrastructure investments and policy improvements have likely contributed to stabilizing the PPP rate, signaling better economic management.

4. Inflation and Purchasing Power

• The rising PPP rate shows that the purchasing power of the Tanzanian shilling has declined over the decades.
• For citizens, this means higher costs of living, as more local currency is needed to purchase goods and services.
• For businesses, it reflects reduced competitiveness in global trade, as currency depreciation can make imports more expensive.

5. Future Potential

• The recent stabilization suggests that Tanzania is moving in the right direction. To further improve:
  • Control inflation through sound monetary policies.
  • Boost productivity by investing in key sectors like agriculture, mining, and manufacturing.
  • Strengthen regional trade by leveraging its position in the East African Community (EAC) and African Continental Free Trade Area (AfCFTA).

Tanzania’s reflects progress in economic growth, moderate performance compared to peers, and the need for sustained reforms to improve currency stability and purchasing power. It highlights that Tanzania is transitioning from historical challenges to a more stable economic future, but regional competition (especially with Kenya) underscores the need for continued improvement in governance, trade, and investment climates.

NOTE: The Purchasing Power Parity (PPP) conversion rate provides a measure of how much of a country's currency is needed to purchase the same basket of goods and services in the international market.