Borrowing Patterns, Debt Service, and Sustainability Risks

As of December 2024, Tanzania’s total public debt stood at USD 46.6 billion, with external debt accounting for 70.7% (USD 32.9 billion). The government relied heavily on multilateral lenders (55.4%) and commercial loans (35.6%), increasing exposure to market-driven interest rates. While 21.2% of borrowed funds supported transport and telecommunications infrastructure, 19.4% was used for budget support, highlighting fiscal dependence on borrowing. With debt service payments reaching USD 185.4 million in December, managing repayment risks and prioritizing productive investments is crucial for long-term sustainability​

Debt Developments in Tanzania – December 2024

Tanzania’s total public debt stock reached USD 46,562.1 million at the end of December 2024, reflecting a 0.5% monthly increase. Of this, external debt accounted for 70.7% (USD 32,928.4 million), while domestic debt stood at TZS 32,649.3 billion. The rise in external debt was attributed to new disbursements amounting to USD 376.8 million, mainly to finance government projects and budgetary support​.

1. External Debt Stock and Composition

• Total external debt stock at the end of December 2024 was USD 32,928.4 million, reflecting a 1.8% decrease from USD 33,528.6 million in November 2024.
• The Central Government held 77.4% of the external debt (USD 25,488.3 million), while the private sector accounted for 22.6% (USD 7,436.4 million).
• The decrease in external debt was due to higher debt service payments (USD 185.4 million in December 2024), including USD 111.2 million in principal repayments​.

2. External Debt Stock by Creditor

Tanzania’s external debt is held by multilateral, bilateral, commercial, and export credit lenders. The composition as of December 2024 was as follows:

• Multilateral institutions (55.4%) remain the largest creditors, providing concessional loans with lower interest rates.
• Commercial loans (35.6%) have grown, increasing exposure to market-driven interest rates, which could raise debt service costs in the future.
• Bilateral and export credit debt (9.1%) mainly finances infrastructure projects​.

3. Disbursed Outstanding Debt by Use of Funds (Percentage Shares)

Tanzania’s external debt is allocated across various sectors, primarily transport, energy, social services, and budget support.

• The transport sector (21.2%) and energy (14.6%) received the largest funding, supporting infrastructure expansion projects.
• Social services (20.3%) include education and healthcare investments, improving human capital development.
• Budget support (19.4%) shows the government's reliance on external borrowing to cover fiscal gaps​.

Key Takeaways:

1. External debt dominates Tanzania’s public debt (70.7% of total debt).
2. Multilateral institutions are the main creditors (55.4%), but commercial loans (35.6%) are rising, increasing debt servicing risks.
3. Most funds go to transport (21.2%), social services (20.3%), and budget support (19.4%), reflecting a focus on infrastructure and fiscal stability.
4. The government must manage rising debt service payments (USD 185.4 million in December 2024) to ensure long-term sustainability.

With total public debt at USD 46.6 billion, debt sustainability remains a critical concern, requiring effective fiscal management and prioritization of productive investments​

The debt developments in Tanzania for December 2024 reveal key trends in borrowing patterns, creditor composition, and the sustainability of external debt.

These figures indicate both opportunities and risks for fiscal management and economic stability

1. External Debt Remains the Largest Share of Public Debt

• External debt accounts for 70.7% (USD 32.9 billion) of total public debt (USD 46.6 billion).
• The government is highly reliant on external borrowing, particularly from multilateral lenders (55.4%) and commercial lenders (35.6%).
• While multilateral loans are concessional (low interest, long-term), the growing share of commercial loans (USD 11.7 billion) exposes Tanzania to higher borrowing costs and foreign exchange risks.

Implication:
✅ Multilateral financing provides stable, low-cost funding.
⚠️ High commercial debt increases vulnerability to global interest rate changes, raising repayment costs.

2. Debt Service Obligations Are Increasing

• In December 2024, the government made debt service payments of USD 185.4 million, including USD 111.2 million in principal repayment.
• The growing debt requires more foreign exchange reserves for repayment, increasing exposure to shilling depreciation risks.

Implication:
⚠️ Future fiscal space may shrink as more funds are allocated for debt repayment instead of public services or development.
✅ If borrowed funds are well-invested, economic growth could offset repayment pressures.

3. Most Borrowed Funds Are Used for Infrastructure and Budget Support

• 21.2% of external debt funds are directed to transport and telecommunications, supporting infrastructure expansion (roads, railways, ports).
• 20.3% is allocated to social services (health & education), improving human capital.
• 19.4% goes to budget support, indicating the government’s reliance on borrowing to fund recurrent expenditures.

Implication:
✅ Investing in infrastructure can boost economic growth, improving debt repayment capacity.
⚠️ Using loans for budget support suggests fiscal weaknesses, as the government borrows to cover recurrent expenses instead of productive investments.

4. Debt Sustainability Risks and Management Needs

• Public debt reached USD 46.6 billion, requiring careful management to avoid over-indebtedness.
• The growing commercial loan share increases interest rate risks, requiring improved revenue mobilization to cover repayments.
• Tanzania’s debt remains below the IMF/World Bank risk threshold (55% of GDP), but a rising trend requires close monitoring.

What Needs to be Done?
🔹 Shift borrowing towards productive sectors (e.g., manufacturing, agriculture) to generate returns.
🔹 Reduce reliance on commercial loans and prioritize concessional financing.
🔹 Enhance revenue collection to reduce reliance on budget support loans.
🔹 Strengthen fiscal discipline to ensure borrowed funds are effectively utilized.

Overall Takeaway

📌 Tanzania’s external debt remains dominant (70.7%), with a shift toward commercial borrowing (35.6%).
📌 Debt service payments (USD 185.4 million) are rising, limiting future fiscal flexibility.
📌 Infrastructure investment (21.2%) supports economic growth, but reliance on budget support loans (19.4%) is a concern.
📌 Debt sustainability requires a shift to revenue-driven fiscal policies, careful borrowing, and economic diversification.

While Tanzania’s debt is still within manageable limits, a proactive approach is needed to prevent future fiscal risks​

Zanzibar’s economy grew by 6.2% in 2024, up from 5.8% in 2023, driven by tourism (12.7% growth), trade (7.1% growth), and infrastructure investments. The inflation rate dropped to 3.9%, improving purchasing power, while government revenue reached TZS 1.43 trillion (+5.6%), exceeding targets. However, a budget deficit of TZS 190 billion remains, requiring better expenditure management. Exports grew by 9.8% (TZS 596.2 billion), but import dependence remained high at TZS 2.01 trillion. To sustain growth, Zanzibar must diversify its economy beyond tourism and enhance domestic production to reduce trade imbalances​.

Zanzibar’s economy showed steady growth in 2024, supported by strong tourism recovery, increased trade activities, and improved infrastructure investments. The real GDP growth rate was estimated at 6.2%, up from 5.8% in 2023, driven by expansions in tourism, construction, and agriculture​.

1. GDP Growth and Sectoral Performance

• Real GDP growth: 6.2% in 2024, up from 5.8% in 2023.
• Nominal GDP: Estimated at TZS 5.2 trillion, reflecting expansion in key sectors.

Sectoral Contributions to GDP

Key Observations:

✅ Tourism (29.5% of GDP) remained the backbone of Zanzibar’s economy, recording a 12.7% growth, supported by 1.02 million tourist arrivals (+14.2%).
✅ Trade & transport (18.3% of GDP) benefited from increased imports and port activities.
⚠️ Agriculture (16.8% of GDP) recorded slow growth (+4.9%), affected by unpredictable weather and limited value addition.

2. Inflation and Cost of Living

• Average inflation in Zanzibar stood at 3.9% in December 2024, lower than 4.5% in 2023, supported by stable food prices and energy costs.
• Food inflation declined to 4.1%, down from 5.3% in 2023, due to improved local food production and steady imports.
• Non-food inflation remained stable at 3.7%, driven by controlled fuel prices and lower transport costs.

Implication:
✅ Lower inflation improved purchasing power, benefiting households and businesses.
⚠️ Food price volatility remains a risk, requiring further investment in food security and agro-processing.

3. Government Revenue and Expenditure

• Total government revenue: TZS 1.43 trillion, exceeding the target by 5.6%, due to improved tax collection and tourism levies.
• Tax revenue: TZS 1.22 trillion, up 8.4% from 2023, with strong contributions from VAT (TZS 368.9 billion, +10.2%) and import duties (TZS 292.5 billion, +7.8%).
• Total government expenditure: TZS 1.62 trillion, with 62% allocated to development projects such as roads, water, and education infrastructure.

Implication:
✅ Higher revenue collection reduces reliance on central government transfers.
⚠️ A budget deficit of TZS 190 billion remains, requiring better expenditure management.

4. Trade and Investment in Zanzibar

• Total exports: TZS 596.2 billion, up 9.8% from 2023, driven by seafood (TZS 212.4 billion, +12.3%) and spices (TZS 159.7 billion, +11.8%).
• Total imports: TZS 2.01 trillion, up 6.7%, mainly in machinery (TZS 521.3 billion, +9.2%) and petroleum (TZS 642.8 billion, +10.1%).
• Foreign Direct Investment (FDI): TZS 324.7 billion, up 15.6%, led by tourism, construction, and port expansion projects.

Implication:
✅ Higher exports and FDI indicate increased investor confidence.
⚠️ Import dependence remains high, especially in energy and industrial goods.

5. Banking and Financial Services

• Total banking sector assets: TZS 3.42 trillion, up 7.9%, indicating a growing financial sector.
• Private sector credit growth: +10.8%, mainly in real estate (TZS 312.5 billion, +11.2%) and trade (TZS 254.3 billion, +9.6%).
• Interest rates on loans: Average lending rate at 12.8%, slightly lower than 13.2% in 2023, making credit more accessible.

Implication:
✅ Lower interest rates encourage borrowing and investment.
⚠️ Credit concentration in a few sectors (real estate and trade) increases risks if economic shocks occur.

Key Takeaways

📌 Zanzibar’s economy grew by 6.2%, with tourism (12.7% growth) and trade (7.1% growth) as key drivers.
📌 Inflation remained stable at 3.9%, while government revenue (TZS 1.43 trillion) exceeded targets.
📌 Exports increased by 9.8% (TZS 596.2 billion), but import dependence remains high (TZS 2.01 trillion).
📌 The financial sector is expanding, with private sector credit growing by 10.8%.

To sustain growth, Zanzibar must diversify exports, improve agricultural productivity, attract more investment in manufacturing, and manage public spending efficiently

The economic performance of Zanzibar in December 2024 provides key insights into growth trends, sectoral contributions, fiscal management, and financial stability

1. Zanzibar’s Economy is Expanding, Led by Tourism and Trade

• Real GDP growth reached 6.2% in 2024, up from 5.8% in 2023, showing strong economic momentum.
• Tourism contributed 29.5% of GDP and grew by 12.7%, with tourist arrivals reaching 1.02 million (+14.2%), confirming a full post-pandemic recovery.
• Trade & transport (18.3% of GDP) grew by 7.1%, benefiting from increased port activities and import demand.

Implication:
✅ Zanzibar’s economy is growing steadily, driven by services and trade.
⚠️ Overreliance on tourism makes the economy vulnerable to external shocks (e.g., global crises, pandemics).

2. Inflation is Under Control, Improving Household Purchasing Power

• Inflation averaged 3.9% in 2024, lower than 4.5% in 2023, due to stable food and energy prices.
• Food inflation dropped to 4.1% from 5.3%, reflecting better domestic production and imports stability.

Implication:
✅ Lower inflation supports economic stability and consumer spending.
⚠️ Food price volatility remains a risk, requiring further investment in local food production.

3. Government Revenue is Improving, but a Fiscal Deficit Remains

• Revenue collection exceeded targets, reaching TZS 1.43 trillion (+5.6%), with strong tax contributions.
• Total expenditure was TZS 1.62 trillion, with 62% allocated to development projects.
• The budget deficit stood at TZS 190 billion, showing Zanzibar still relies on financing to meet expenditure needs.

Implication:
✅ Improved tax collection reduces dependency on mainland Tanzania.
⚠️ The budget deficit indicates a need for better public spending control and domestic revenue mobilization.

4. Trade and FDI Are Growing, but Import Dependence is High

• Exports increased by 9.8% (TZS 596.2 billion), mainly from seafood (+12.3%) and spices (+11.8%).
• Imports rose by 6.7% (TZS 2.01 trillion), with petroleum and machinery as the largest contributors.
• FDI inflows reached TZS 324.7 billion (+15.6%), driven by tourism, construction, and port expansion.

Implication:
✅ Rising exports and FDI show increasing investor confidence in Zanzibar.
⚠️ High import dependency, especially on petroleum and industrial goods, increases trade vulnerabilities.

5. Banking Sector is Expanding, Encouraging Private Sector Growth

• Total banking assets grew by 7.9% (TZS 3.42 trillion), showing financial sector strength.
• Private sector credit expanded by 10.8%, mainly in real estate (+11.2%) and trade (+9.6%).
• Lending rates dropped slightly to 12.8% (from 13.2% in 2023), making credit more affordable.

Implication:
✅ More credit availability supports business growth and investments.
⚠️ High credit concentration in real estate and trade may pose risks if the market slows.

Key Takeaways and What Needs to Be Done

📌 Zanzibar’s economy is growing steadily (+6.2%), with tourism (+12.7%) and trade (+7.1%) as key drivers.
📌 Inflation is low (3.9%), supporting household purchasing power and business growth.
📌 Government revenue (TZS 1.43 trillion) is improving, but a budget deficit (TZS 190 billion) remains a challenge.
📌 Trade and FDI are increasing, but import dependence on petroleum and industrial goods is high.
📌 The financial sector is expanding, with private sector credit growing by 10.8%.

Policy Recommendations:

🔹 Diversify the economy beyond tourism by promoting manufacturing, agriculture, and ICT.
🔹 Strengthen food security to reduce reliance on imported food items.
🔹 Enhance fiscal discipline to control the budget deficit and ensure sustainable spending.
🔹 Invest in renewable energy to reduce reliance on imported petroleum.
🔹 Support financial inclusion to expand credit access beyond real estate and trade.

Zanzibar’s economic outlook remains positive, but diversification and fiscal discipline will be key to sustaining long-term growth​

Revenue Growth, Expenditure Trends, and Fiscal Deficit Challenges

Tanzania’s budget performance in December 2024 reflected strong revenue collection, controlled expenditure, and a widening fiscal deficit. The government collected TZS 2,737.6 billion, exceeding the target by 2.4%, driven by tax revenue (TZS 2,338.5 billion, up 4.4%). However, total government expenditure reached TZS 3,612.4 billion, with 67% allocated to recurrent costs and 33% to development projects. This resulted in a budget deficit of TZS 874.8 billion, financed through domestic and external borrowing, increasing public debt to USD 46.6 billion. While revenue mobilization improved, fiscal sustainability remains a concern, requiring diversification of income sources and better expenditure management​

Government Budgetary Operations – December 2024

Tanzania’s government budgetary operations in December 2024 reflected strong revenue collection and controlled expenditure, but the country still faced a budget deficit, requiring strategic fiscal management.

1. Central Government Revenues

• Total domestic revenue collected in December 2024 amounted to TZS 2,737.6 billion, exceeding the monthly target by 2.4%.
• Central government revenue accounted for 96% of total collections, reaching TZS 2,628.6 billion, surpassing the target by 2.5%.
• Tax revenue outperformed expectations by 4.4%, reaching TZS 2,338.5 billion, with strong contributions from:
  • Taxes on imports: TZS 940.6 billion
  • Income tax: TZS 628.8 billion
  • Taxes on local goods and services: TZS 495.9 billion
  • Non-tax revenue: TZS 290.1 billion, slightly below target​.

Implication:

✅ Higher revenue collection suggests improved tax compliance and efficient revenue mobilization.
⚠️ Non-tax revenue underperformance could indicate challenges in public sector efficiency and collection mechanisms.

2. Central Government Expenditure

• Total government spending in December 2024 was TZS 3,612.4 billion.
  • Recurrent expenditure: TZS 2,420.3 billion (for salaries, interest payments, and operational costs).
  • Development expenditure: TZS 1,192.1 billion (for infrastructure and social projects).
• Breakdown of spending categories:
  • Wages and salaries: TZS 1,105.2 billion
  • Interest payments: TZS 387.1 billion
  • Other recurrent expenditure: TZS 1,192.1 billion
  • Development expenditure: TZS 1,192.1 billion, primarily focused on public investments​.

Implication:

✅ Balanced spending on recurrent and development sectors ensures government services continue while maintaining infrastructure growth.
⚠️ High recurrent spending (~67% of total) may limit development financing, affecting long-term economic expansion.

3. Budget Deficit

• Budget deficit (before grants) stood at TZS 874.8 billion, meaning the government spent more than it collected.
• The deficit was primarily financed through borrowing, including domestic bonds and external loans.
• The public debt stock rose to USD 46,562.1 million, with 70.7% of this being external debt​.

Implication:

⚠️ A persistent budget deficit means the government relies on borrowing, increasing future debt service obligations.
✅ Managing the deficit through investment in productive sectors (infrastructure, energy, agriculture) could stimulate economic growth and future revenue.

Key Takeaways

• Revenue collection exceeded targets, with TZS 2,737.6 billion collected (+2.4% higher than planned).
• Total spending reached TZS 3,612.4 billion, with wages and salaries (TZS 1,105.2 billion) and development (TZS 1,192.1 billion) as major expenses.
• The budget deficit (TZS 874.8 billion) was mainly covered by borrowing, increasing total public debt to USD 46.6 billion.
• While strong revenue mobilization is promising, reducing reliance on borrowing is crucial for long-term fiscal sustainability​

The government budgetary operations for December 2024 reveal key insights about Tanzania’s fiscal position, revenue performance, expenditure priorities, and debt sustainability

1. Strong Revenue Performance but Dependence on Tax Revenue

• Revenue collection exceeded the target by 2.4% (TZS 2,737.6 billion), showing improved tax compliance and effective revenue mobilization.
• Tax revenue accounted for 85.4% of total revenue (TZS 2,338.5 billion), meaning the government relies heavily on taxes rather than alternative revenue sources.
• Non-tax revenue underperformed at TZS 290.1 billion, suggesting limited diversification of government income from sources like fees, dividends, and state-owned enterprises.

Implication:
✅ The government is collecting more revenue than expected, which is positive for fiscal stability.
⚠️ Heavy reliance on tax revenue means any economic slowdown could impact future revenue collection, requiring more diversification.

2. High Government Spending but Investment in Development

• Total expenditure was TZS 3,612.4 billion, with 67% going to recurrent spending (TZS 2,420.3 billion) and 33% to development (TZS 1,192.1 billion).
• High wage and salary costs (TZS 1,105.2 billion) suggest a large public sector wage bill, which limits resources for investment.
• Development spending (TZS 1,192.1 billion) was significant, meaning the government is still prioritizing infrastructure and public service improvements.

Implication:
✅ The government is maintaining investment in development projects, which can boost economic growth.
⚠️ High recurrent costs may crowd out spending on critical infrastructure and increase reliance on borrowing.

3. Budget Deficit and Rising Debt Levels

• The budget deficit stood at TZS 874.8 billion, meaning the government spent more than it collected.
• Public debt rose to USD 46.6 billion, with 70.7% being external debt.
• The government financed the deficit through domestic and external borrowing, increasing future debt servicing costs.

Implication:
⚠️ A persistent budget deficit means the government must borrow more, increasing debt obligations.
✅ If borrowing is channeled into productive sectors, it can stimulate long-term growth, making debt more sustainable.

Overall Takeaways

• Revenue collection is strong, but tax revenue dominates, posing a risk if economic conditions change.
• Government spending is high, particularly on wages and salaries, but development projects are still being prioritized.
• The budget deficit is concerning, but if borrowed funds are used effectively, they can help drive economic growth.
• Debt sustainability remains a challenge, requiring careful management to ensure Tanzania does not enter a debt crisis.

What Needs to be Done?

🔹 Diversify revenue sources beyond tax income.
🔹 Control recurrent spending, especially the public sector wage bill.
🔹 Ensure borrowed funds are invested in growth-driven sectors like infrastructure, agriculture, and energy.
🔹 Strengthen fiscal discipline to reduce reliance on debt financing

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.