As of October 2024, Tanzania's financial markets have exhibited mixed but resilient performance. The government securities market showed a preference for long-term bonds, while short-term Treasury Bills faced under subscription. Meanwhile, the interbank cash market saw increased turnover, and the foreign exchange market benefited from improved liquidity driven by strong export earnings. Despite some liquidity tightness, particularly due to crop purchase demands, the overall market conditions remain stable, supporting Tanzania’s broader economic growth and monetary policy objectives.

1. Government Securities Market:

Treasury Bills (T-Bills):

• Tender Size: The combined total for two auctions was TZS 253.3 billion.
• Bids Received: A total of TZS 118.4 billion in bids was received.
• Bids Accepted: All bids were accepted, indicating strong interest despite the under subscription.
• Weighted Average Yield: The yield for T-Bills increased to 11.55% from 10.85% in the previous month. This increase reflects rising investor demand for higher returns, possibly due to inflationary pressures or market uncertainty.
• Performance: The T-Bills market was undersubscribed, suggesting a preference among investors for longer-term government debt instruments such as bonds.

Treasury Bonds (T-Bonds):

• Total Tender Size: TZS 395.6 billion was offered.
• Bids Attracted: The market saw TZS 354.6 billion in bids, a healthy demand.
• Successful Bids: TZS 310.6 billion worth of bids were accepted.
• Weighted Average Yields:
  • 5-year Bond Yield: 12.41%
  • 15-year Bond Yield: 15.76%
  • 20-year Bond Yield: 15.76%
• Key Insights: Investors showed a preference for long-term bonds with high yields, particularly the 15-year and 20-year bonds, which both had a yield of 15.76%, reflecting the demand for long-term investments amidst current inflationary trends.

2. Interbank Cash Market (IBCM):

• Market Turnover: The total turnover in the IBCM increased to TZS 2,093.7 billion, up from TZS 1,564.7 billion in September, showing increased trading activity.
• Overnight Transactions: 39.1% of the total market turnover consisted of overnight transactions, indicating a strong short-term borrowing and lending activity.
• 7-Day Transactions: 20.6% of the market turnover was related to 7-day transactions, showing a preference for slightly longer-term liquidity management.
• IBCM Interest Rate: The average interest rate for the IBCM stood at 8.04%, down slightly from 8.16% in September. This indicates a minor improvement in liquidity conditions, possibly due to lower demand for immediate liquidity.
• Liquidity Conditions: The market was characterized by a decline in liquidity due to higher demands from crop purchases, particularly in the agricultural sector.

3. Interbank Foreign Exchange Market (IFEM):

• Market Performance: There was a significant increase in market activity, with transactions rising to USD 50.7 million from USD 8.35 million in September. This increase suggests a surge in demand for foreign currency.
• Bank of Tanzania's Net Purchase: The Bank of Tanzania purchased USD 4.5 million to stabilize the exchange rate and address exchange rate volatility.
• Exchange Rate:
  • The average exchange rate was TZS 2,719.91 per US dollar, which is an improvement from TZS 2,727.41 per US dollar in September.
  • Annual Depreciation: The Tanzanian Shilling has depreciated by 8.98% year-on-year, an improvement from 10.11% depreciation in the previous month. This improvement reflects the stabilization efforts in the foreign exchange market.
• Foreign Exchange Liquidity: Liquidity improved due to strong export earnings from:
  • Cashew nut exports
  • Gold exports
  • Tourism earnings

Key Market Characteristics:

1.  Improved foreign exchange liquidity supported by strong export revenue.
2.  Slight appreciation of the Shilling, indicating improved market conditions and investor confidence.
3.  Under Subscription in government securities, particularly in T-Bills, reflecting a shift towards longer-term investments.
4. Active interbank cash market, showing increased turnover and liquidity activity.
5. Minimal intervention by the Bank of Tanzania in the IFEM, with their intervention limited to stabilizing volatility.

• Mixed Performance: The financial markets showed a mixed performance in October 2024:
  • The interbank cash market was strong, reflecting solid liquidity management but facing some liquidity tightness due to crop purchases.
  • The foreign exchange market saw improved liquidity and a slight appreciation of the Tanzanian Shilling, largely supported by export earnings.
  • Government securities, however, faced undersubscription in the T-Bills market, with investors preferring long-term bonds.
• Resilient Market: Despite some liquidity constraints, particularly in short-term markets like T-Bills, overall market conditions were stable, with resilience in the broader financial markets.
• Monetary Policy Support: The Bank of Tanzania's monetary policy appeared effective in maintaining market stability, addressing exchange rate volatility, and promoting growth while keeping inflation in check.

Tanzania's financial markets as of October 2024 provides insights into the overall health and performance of key market segments, including government securities, interbank cash, and foreign exchange markets.

1. Government Securities Market:

• T-Bills and T-Bonds Performance:
  • Undersubscription in T-Bills indicates that investors are increasingly seeking longer-term investments, possibly due to concerns about inflation or a desire for higher yields. This suggests that short-term instruments are less attractive compared to the stability offered by longer-term bonds.
  • The strong demand for Treasury Bonds, particularly the 15-year and 20-year bonds with yields of 15.76%, highlights a preference for higher yields, signaling confidence in the government’s long-term fiscal management and a search for safer, more rewarding investments.

2. Interbank Cash Market (IBCM):

• The increase in market turnover to TZS 2,093.7 billion suggests more trading activity and a higher demand for liquidity. This could be linked to the need for short-term financing in the economy, likely due to cash flow demands in various sectors (e.g., agriculture).
• The decline in liquidity driven by crop purchase demands shows that there are seasonal pressures on cash flows, but the market remains active and responsive.

3. Foreign Exchange Market (IFEM):

• The increase in foreign exchange transactions and the Bank of Tanzania's net purchase of USD 4.5 million signal that there is a proactive effort to manage exchange rate volatility and stabilize the Shilling.
• The slight appreciation of the Tanzanian Shilling (from TZS 2,727.41 to TZS 2,719.91 per USD) and improved foreign exchange liquidity point to better export performance (e.g., cashew nuts, gold, and tourism), which is strengthening the country's foreign currency reserves and stabilizing the currency.
• The 8.98% annual depreciation of the Shilling, which improved from 10.11% in September, suggests that the currency is stabilizing but is still under pressure due to global economic conditions and domestic challenges.

4. Market Summary:

• Mixed Market Performance:
  • The markets were generally stable but faced some challenges:
    • Government securities showed moderate performance, with preference for longer-term bonds.
    • Foreign exchange and interbank cash markets showed resilience, benefiting from exports and market interventions.
  • Overall Stability: The financial markets remain resilient, supporting Tanzania’s economic growth while maintaining price stability, which is the key objective of the central bank’s monetary policy.
• Investor Sentiment: Investors seem cautious about short-term instruments (T-Bills) but are confident in the long-term outlook, as reflected in the demand for long-term bonds.

5. Broader Economic Implications:

• Liquidity Tightness: While liquidity tightness due to crop purchases may be a short-term issue, the increase in market turnover suggests that there is still confidence in short-term lending and borrowing within the banking system.
• Monetary Policy Effectiveness: The Bank of Tanzania’s actions—particularly in the foreign exchange market—show its ability to intervene and manage exchange rate volatility effectively. It also indicates a balance between addressing liquidity challenges and supporting economic growth.
• Stable Economic Environment: Despite the undersubscription in T-Bills, the overall stable performance of the financial markets suggests that Tanzania is navigating global economic pressures while maintaining a healthy domestic economy.

In summary, the analysis tells us that Tanzania’s financial markets are currently facing mixed conditions, but overall, they are demonstrating resilience, with strong export performance and improved liquidity conditions. The government’s fiscal and monetary policies appear to be effectively supporting stability and growth

Tanzania's monetary policy in the fourth quarter of 2024 demonstrated a strategic approach to sustaining economic growth while maintaining price stability. The Bank of Tanzania (BoT) maintained a stable policy stance, supporting key sectors like agriculture, manufacturing, and construction through robust private sector credit growth. Effective liquidity management and moderate adjustments in interest rates highlighted the central bank’s commitment to fostering macroeconomic stability and inclusive economic activity.

Central Bank Rate (CBR) and Policy Stance

• CBR: The Bank of Tanzania (BoT) maintained the Central Bank Rate at 6%, demonstrating a stable monetary policy stance.
• 7-day Interbank Cash Market (IBCM) Rate: This rate was expected to fluctuate within ±200 basis points (bps) of the CBR, indicating the BoT's tolerance for short-term liquidity variations while ensuring stability.

Liquidity Conditions and Interbank Markets

1. Bank Liquidity

• Liquidity was tight in October 2024 due to increased demand for cash for seasonal crop purchases, especially cashew nuts.
• The 7-day IBCM rate averaged 8.48%, slightly exceeding the BoT's policy corridor, but declined from 8.58% in September 2024.

2. Monetary Injections

• To manage liquidity, the BoT scaled up injections through reverse repurchase agreements (reverse repos):
  • October 2024: TZS 2,887.9 billion,
  • September 2024: TZS 2,160 billion.
    This significant increase in reverse repos reflects the BoT’s active role in maintaining liquidity.

Monetary Aggregates Growth

1. Extended Broad Money Supply (M3)

• Growth in M3 accelerated:
  • October 2024: 14.6%,
  • September 2024: 11.4%,
  • October 2023: 12.4%.
    This rise indicates expanding financial activity, supported by robust monetary policy transmission.

2. Private Sector Credit

• Credit growth to the private sector remained strong:
  • October 2024: 17%,
  • September 2024: 17.5%,
  • October 2023: 17.9%.
    While slightly lower, this consistent growth reflects ongoing support for economic sectors.

Sectoral Credit Distribution

1. Agriculture:
   • Recorded the highest growth in credit at 44.7%, reflecting strong support for rural and agricultural activities.
2. Manufacturing:
   • Credit growth reached 18.7%, aiding industrial expansion.
3. Building and Construction:
   • Growth at 18.6%, indicative of sustained infrastructure investment.
4. Personal Loans:
   • Comprising 38.2% of the total loan portfolio, largely benefiting SMEs.
5. Trade:
   • Represented 12.7% of the loan portfolio.
6. Agriculture (overall share):
   • Accounted for 12% of total loans, emphasizing its importance in Tanzania’s economy.

Interest Rate Developments

1. Overall Lending Rate:
   • Increased to 15.67% from 15.53%, signaling slight tightening.
2. Negotiated Lending Rate:
   • Remained stable at 12.93%, aiding business planning.
3. Overall Deposit Rate:
   • Increased to 8.25% from 8.20%, enhancing savings attractiveness.
4. Negotiated Deposit Rate:
   • Rose significantly to 10.27% from 9.12%, reflecting better returns for large depositors.

Key Observations

1. Price Stability:
   • Despite tighter liquidity in October, the monetary policy maintained overall price stability.
2. Support for Growth:
   • The growth in M3 and private sector credit illustrates that monetary policy supported economic activity effectively.
3. Balanced Approach:
   • The policy successfully managed liquidity and ensured sufficient credit flow, particularly to productive sectors like agriculture and manufacturing.
4. Macroeconomic Stability:
   • BoT’s monetary policy ensured stable inflation, sustainable economic growth, and reasonable interest rates.

This multi-dimensional approach highlights the effectiveness of Tanzania’s monetary policy in fostering both macroeconomic stability and sectoral growth.

Tanzania's monetary policy in the fourth quarter of 2024 with key insights about the country's economic environment and the effectiveness of its central bank actions.

1. Policy Stability and Support for Economic Growth

• The stable Central Bank Rate (CBR) at 6% indicates a commitment to fostering economic growth while maintaining inflation within a manageable range.
• Despite seasonal liquidity tightness, the monetary policy stance was accommodative, ensuring adequate support for economic sectors.

2. Effective Liquidity Management

• Tight liquidity in October was managed through increased monetary injections (reverse repos). This intervention highlights the Bank of Tanzania's flexibility in responding to short-term economic demands (e.g., seasonal crop purchases like cashew nuts).
• The slight decline in the 7-day interbank cash market (IBCM) rate signals gradual easing of liquidity pressures.

3. Strong Credit Growth

• Robust credit growth of 17% in the private sector reflects a healthy financial sector capable of supporting businesses and households.
• Sectors like agriculture (44.7%), manufacturing (18.7%), and construction (18.6%) benefited significantly, showcasing targeted resource allocation to productive and growth-enhancing areas.

4. Interest Rate Dynamics

• The rise in lending and deposit rates indicates moderate tightening of monetary conditions, potentially to control inflation or stabilize the currency. However, negotiated rates remain competitive, supporting business borrowing and savings.
• The increase in the negotiated deposit rate (10.27%) suggests banks are competing for large deposits, possibly due to higher demand for liquidity.

5. Expansion in Monetary Aggregates

• The strong growth in the money supply (M3) to 14.6% and private sector credit underscores:
  • Economic confidence, with businesses and individuals accessing financing for growth.
  • An effective monetary transmission mechanism, where policy changes successfully impact financial flows.

6. Focus on Key Sectors

• The priority for agriculture reflects Tanzania's reliance on this sector for economic stability and employment. The highest credit growth in agriculture indicates significant support for rural economies and food security.
• The dominance of personal loans (38.2%) highlights the importance of SMEs and individual businesses in Tanzania's economic framework.

7. Macroeconomic Balance

• The policy achieved a delicate balance between:
  • Inflation control (via tight liquidity management and slightly higher rates),
  • Credit expansion (to productive sectors),
  • Economic growth support (through liquidity injections and targeted sectoral credit).

Conclusion

Tanzania's monetary policy in Q4 2024 reveals a proactive central bank addressing both short-term challenges (like seasonal liquidity tightness) and long-term goals (sectoral growth, price stability, and financial inclusion). It highlights an economy growing steadily, with sound monetary management ensuring stability and opportunity for diverse sectors.

Tanzania has successfully sustained inflation below the medium-term target of 5%, reflecting strong economic policies and favorable supply conditions. Headline inflation eased to 3.0% in October 2024, supported by declining energy costs, stable food prices, and prudent monetary management. This stability highlights Tanzania's resilience to global shocks and its commitment to fostering a predictable economic environment for growth and investment.

Headline Inflation

• Trend:
  Headline inflation in Tanzania remained below the medium-term target of 5%, reflecting overall price stability.
  • October 2024: 3.0%
  • September 2024: 3.1%
• Implication:
  This indicates effective inflation control through stable prices in both food and non-food items. A 0.1 percentage point drop signals a steady, controlled environment for inflation management.

Energy and Fuel Inflation

• Trend:
  • October 2024: 9.7%
  • September 2024: 11.5%

A notable decline of 1.8 percentage points in energy and fuel inflation due to easing pump prices in the domestic market.

• Drivers:
  • Global energy price reductions during July–September 2024, leading to lower import costs.
  • Domestic adjustments in fuel prices influenced by global trends.
• Example (Domestic Fuel Prices):
  • Average pump price for petrol:
    • August 2024: 2,600 TZS/liter
    • October 2024: 2,500 TZS/liter

Core Inflation

• Definition: Excludes volatile items like fuel and unprocessed food, reflecting underlying inflation pressures.
• Trend:
  • August–October 2024: Steady at 3.2%
  • Previous peaks:
    • March–April 2024: 3.9%
• Implication:
  The sustained moderation (down 0.7 percentage points from earlier peaks) signifies improving control over cost pressures in non-volatile goods and services.

Food Inflation

• Trend:
  • October 2024: 2.5% (unchanged from September 2024).
  • Year-on-Year Comparison: Lower than 2023

Factors Supporting Stability

1.                Improved Production:

• Good weather led to higher yields.
• Enhanced use of inputs like fertilizers, quality seeds, and pesticides.

2.                Price Trends:

• Decreasing costs for staple foods (examples):
  • Maize: 750 TZS/kg (October 2024) vs. 800 TZS/kg (October 2023).
  • Beans: 2,000 TZS/kg (October 2024) vs. 2,200 TZS/kg (October 2023).
  • Rice: 1,500 TZS/kg (October 2024) vs. 1,600 TZS/kg (October 2023).

3.            Global Wheat Prices:

• Reflected in local market trends, easing bakery and flour prices.

Contributing Factors for Low Inflation

1. Good Food Supply Conditions:
   • Favorable weather and input supply ensured adequate harvests.
2. Moderation in Global Commodity Prices:
   • Decline in crude oil prices:
     • Brent Crude: $85/barrel (Q3 2024) vs. $90/barrel (Q2 2024).
3. Prudent Monetary Policy:
   • Bank of Tanzania maintained a neutral stance to prevent inflationary pressures.
4. Stable Exchange Rate Management:
   • Exchange rate stability against the USD (approximately 2,350 TZS/USD) prevented import cost escalations.

Overall Inflation Trend

• October 2024: Inflation remained well below the 5% medium-term target, showcasing:
  • Successful implementation of monetary policy.
  • Favorable domestic supply conditions.
• Implication: Price stability contributes to economic confidence, promoting investment and consumption.

Tanzania's inflation developments reveal the following insights:

1. Economic Stability and Effective Policy Management

• Key Indicator: Headline inflation consistently below the medium-term target of 5%.
• Implication: This highlights the success of Tanzania's monetary policies and economic strategies, ensuring a stable macroeconomic environment.

2. Control Over Volatile Sectors

• Energy and Fuel: The sharp decline in inflation for energy and fuel reflects Tanzania's responsiveness to global market trends and its capacity to translate these into lower domestic prices.
• Food Sector: Stable food inflation at 2.5% signifies strong agricultural performance, supported by favorable weather and policy measures that enhance input availability and reduce food costs.

3. Underlying Inflation Pressures are Contained

• Core Inflation Stability: Steady at 3.2% over recent months, showing that non-volatile components of the economy, such as housing, education, and healthcare, are not facing sharp price pressures.
• Significance: This stability underpins consumer and business confidence in the economy.

4. Benefits of Global Market Dynamics

• Tanzania's inflation benefited from:
  • Lower global fuel prices, reducing import costs.
  • Falling global wheat prices, easing food-related inflation.
• Implication: The ability to leverage favorable external conditions shows Tanzania's integration into the global economy and effective exchange rate management.

5. Favorable Domestic Conditions

• Strong Agricultural Sector: Adequate food supplies due to good weather and input availability reduced reliance on imports and mitigated price shocks.
• Policy Success: Prudent fiscal and monetary measures, such as stable exchange rate policies, prevented inflationary pressures from external factors like currency depreciation.

6. Positive Signals for Growth

• Low Inflation Environment: Encourages investment and consumer spending due to predictable price levels.
• Attractiveness for Investors: A stable inflation rate below the regional average makes Tanzania an appealing destination for foreign and domestic investment.

Conclusion

Tanzania's inflation trends in 2024 demonstrate a well-managed economy with robust mechanisms to ensure price stability. This reflects:

1. Effective policy implementation.
2. Resilience to external shocks.
3. Sustained growth potential through stable economic conditions.

A Pathway to Sustainable Growth

Africa holds a treasure trove of mineral wealth, producing 80% of the world’s platinum, 67% of its cobalt, and leading in gold, diamonds, and bauxite. Mining contributes significantly to economic growth, accounting for over 20% of total exports in many countries like the DRC (81%) and Botswana (92%). With untapped reserves, such as Guinea’s 1.8 billion tons of iron ore, and growing demand for minerals in renewable energy, Africa is poised to be a global powerhouse. However, challenges like 250% higher logistical costs and environmental concerns underscore the need for sustainable strategies to fully harness this potential.

Trends, Opportunities, Challenges, and Strategies" provides an extensive analysis of Africa’s mining sector, emphasizing its role in economic development and the opportunities and challenges faced.

Key Highlights:

1. Resource Contribution:
   • Africa produces 80% of the world’s platinum, 50% of manganese, and two-thirds of cobalt, essential for clean energy technologies like batteries and solar energy.
   • In 2019, 42 out of 54 African countries were classified as resource-dependent:
     • 18 countries on non-fuel minerals.
     • 10 on energy/fuel exports.
     • Remaining on agricultural exports.
2. Exports and Employment:
   • Mining accounts for 20% of total merchandise exports on average in Africa.
   • In some countries:
     • Botswana: Minerals and metals constitute 92% of exports (2013–2017).
     • DRC: Represents 81% of exports during the same period.
3. Investments:
   • Over $18 billion in new mining projects were expected by the end of 2018, with much concentrated in West Africa (e.g., Ghana, Mali).
   • $50 billion in mining-related infrastructure projects were projected between 2003 and 2030.
4. Economic Impacts:
   • Mining has driven significant GDP growth:
     • In Sierra Leone, iron ore production led to 20.1% GDP growth in 2013.
     • South Africa’s mining companies raised market capitalization in gold and platinum sectors from 22% (2014) to 48% (2016).
5. Challenges:
   • COVID-19 Impact:
     • Disruptions led to sharp declines in commodity prices, except for gold which rose as a safe-haven asset.
     • Labor restrictions varied, with automated mines like Syama (Mali) remaining operational.
   • Infrastructure Gaps:
     • Mining logistics costs in Africa are 250% above the global average due to poor transport and energy networks.
6. Opportunities:
   • Growth in minerals critical for renewable energy, like cobalt and lithium.
   • Underexplored reserves in regions like Burkina Faso (e.g., gold in the Birimian Greenstone Belt).
7. Technology:
   • Use of AI, automation, and big data is reducing costs and improving productivity:
     • The Syama mine’s autonomous operations are an example.
     • Adoption of renewable energy like solar panels at Essakane Gold Mine (Burkina Faso) to cut costs.
8. Sustainable Development:
   • Mining investments have led to improved infrastructure and economic opportunities, such as:
     • Electricity for rural areas.
     • Roads and communication networks in mining regions.

List of the top ten African countries for mining potential, supported by figures:

1. South Africa

• Key Resources: Gold, platinum, coal, and iron ore.
• Gold Production: Former world leader; now the second-largest in Africa.
• Platinum: Produces 80% of global supply.
• Mining’s GDP Share: Contributes approximately 8% of GDP and 45% of exports.
• Market Size: $15 billion annual mineral exports.

2. Democratic Republic of Congo (DRC)

• Key Resources: Cobalt, copper, diamonds.
• Cobalt Production: Supplies 67% of the global demand.
• Copper Reserves: Estimated at 75 million metric tons.
• Mining Exports: Accounts for 81% of total exports.

3. Ghana

• Key Resources: Gold, bauxite, manganese.
• Gold Production: Africa’s largest producer; contributes 95% of mineral revenues.
• Export Revenues: Mining contributes 41% of export revenues and 5% of GDP.
• Annual Gold Output: Around 130 metric tons.

4. Botswana

• Key Resources: Diamonds, nickel.
• Diamond Exports: Contribute 92% of exports.
• World Ranking: Leading supplier of diamonds, with 35% of Africa’s diamond output.
• Mining Revenue: Accounts for more than 20% of GDP.

5. Zambia

• Key Resources: Copper, cobalt, emeralds.
• Copper Output: 6th largest globally, producing 880,000 metric tons annually.
• Cobalt Reserves: Over 2 billion tons.
• Mining Revenue: Contributed $1.6 billion to government revenues in 2016.

6. Guinea

• Key Resources: Bauxite, iron ore.
• Bauxite Reserves: Largest untapped globally; Simandou region holds 1.8 billion tons of high-grade iron ore.
• Mining Exports: Contribute 90% of total exports.
• Annual Bauxite Production: Over 82 million metric tons.

7. Namibia

• Key Resources: Uranium, diamonds, zinc.
• Uranium Output: Fourth-largest producer globally, contributing 7% of global output.
• Diamond Industry: Contributes 10% of GDP.
• Mining Investments: $5 billion in infrastructure projects.

8. Mali

• Key Resources: Gold.
• Gold Production: Among Africa’s largest producers, contributing 70 metric tons annually.
• Export Revenues: Mining accounted for 25% of GDP in recent years.
• Investment Growth: Attracted $3 billion in new gold projects between 2015-2020.

9. Tanzania

• Key Resources: Gold, tanzanite, diamonds.
• Unique Resource: Home to the only Tanzanite mines globally.
• Gold Exports: Contributed over $3 billion in revenues annually.
• Mining Share: Contributes 6% of GDP.

10. Mozambique

• Key Resources: Coal, natural gas, graphite.
• Coal Reserves: Among the world’s largest untapped deposits; produced 15 million metric tons in 2019.
• Graphite Potential: Accounts for 13% of global supply.
• Mining Growth: Annual investments of over $1 billion in exploration and processing.

The strategic importance of Africa’s mining sector as a driver of economic growth, investment, and development while underscoring the continent's potential and challenges in harnessing its rich mineral resources.

1. Vast Resource Endowment

• Africa is a global leader in the production of critical minerals:
  • 67% of cobalt, 80% of platinum, and 50% of manganese.
  • Key suppliers of gold, diamonds, bauxite, and copper.
• This abundance makes Africa central to global supply chains, particularly in renewable energy technologies.

2. Economic Contribution

• Mining constitutes a significant share of GDP, exports, and government revenues in resource-rich countries:
  • Botswana: 92% of exports from diamonds.
  • DRC: 81% of exports from copper and cobalt.
  • Ghana: 41% of export revenues from gold.
• The sector is critical for job creation, infrastructure development, and foreign exchange.

3. Opportunities for Growth

• Untapped Resources: Large reserves remain underexplored, such as iron ore in Guinea and gold in Burkina Faso.
• Renewable Energy Demand: Rising demand for cobalt, lithium, and platinum positions Africa as a global supplier for clean energy technologies.
• Technology and Efficiency: Investments in AI, automation, and renewable energy systems are transforming mining operations, reducing costs, and increasing sustainability.

4. Investment Attractiveness

• Countries like South Africa, Ghana, Zambia, and Guinea offer favorable regulatory frameworks and infrastructure, attracting billions in investments.
• West Africa is emerging as a hotspot due to unexplored reserves and improving business climates.

5. Challenges

• Infrastructure Gaps: High transport and energy costs (250% above global average) limit the sector's profitability.
• Political and Economic Risks: Resource-dependent economies face vulnerability to price fluctuations, governance issues, and the "resource curse."
• COVID-19 Impact: The pandemic disrupted operations, reduced demand, and increased costs.
• Environmental Concerns: Mining contributes to deforestation, pollution, and social displacement.

6. Strategic Recommendations

• Infrastructure Development: Investments in transport and energy networks to unlock inland resource deposits.
• Value Addition: Promoting local mineral processing to increase revenues and diversify economies.
• Governance and Transparency: Strengthening institutions to ensure equitable resource distribution and reduce corruption.
• Technology Adoption: Leveraging automation and renewable energy to boost efficiency and reduce environmental impact.

Overall Insight Africa's mining sector holds immense potential to transform the continent economically. However, to fully capitalize on these resources, there is a need for targeted investments, stronger governance, and sustainable practices. By addressing its challenges, Africa can position itself as a global leader in resource-based industries while driving inclusive growth and development.

In 2023, Tanzania’s Local Government Authorities (LGAs) disbursed TZS 43.94 billion in loans to women and youth, benefiting over 23,000 recipients. This funding, part of a government initiative to promote financial inclusion, is aimed at empowering underserved groups and fostering local entrepreneurship. However, there was a 60.8% decline in women recipients and a 57.0% decline in youth recipients due to a shift from direct lending to bank-managed loans. Despite these challenges, the loans have contributed to economic empowerment, especially in rural and marginalized regions, as reflected in the increase in loan disbursements in Zanzibar to TZS 16.83 billion for 16,432 beneficiaries.

Local Government Authorities (LGAs) in Tanzania have played a pivotal role in providing financial support to underserved groups, particularly women, youth, and people with disabilities. These loans are part of the government's broader financial inclusion efforts, aimed at empowering vulnerable populations and promoting small-scale entrepreneurship:

Key Statistics

1. Total Loan Disbursement in 2023:
   • LGAs in mainland Tanzania disbursed TZS 43.94 billion in loans to women and youth in 2023. This funding aimed to promote financial independence and economic empowerment within these groups.
2. Disbursement by Gender:
   • Women received TZS 24.02 billion across 16,724 loan recipients in 2023.
   • Youth (primarily young entrepreneurs) received TZS 19.92 billion across 10,032 loan recipients.
   • This reflects a strategic focus on empowering women and youth, who often face greater challenges accessing formal financial services.
3. Loan Distribution in Zanzibar:
   • In Zanzibar, the Zanzibar Economic Empowerment Authority (ZEEA) also facilitated access to loans for local businesses, with 16,432 beneficiaries receiving TZS 16.83 billion in 2023, up from TZS 7.32 billion in 2022.
   • This significant increase in loan disbursements in Zanzibar reflects the government's ongoing push to improve financial access for entrepreneurs and small businesses in the region.

Key Programs and Impact

1. Government Loan Schemes:
   • LGAs allocate 10% of their own-source revenues to be used for loans to women, youth, and people with disabilities. This 10% loan allocation is divided as follows:
     • 4% for women
     • 4% for youth
     • 2% for people with disabilities
   • These allocations ensure targeted support for vulnerable groups that may face barriers in accessing credit from mainstream financial institutions.
2. Empowerment through Financial Support:
   • These loans have been crucial in enabling small-scale businesses, particularly in rural and underserved areas, to grow and expand.
   • The funding has supported entrepreneurial initiatives, ranging from agriculture to small retail businesses, allowing beneficiaries to improve their livelihoods and contribute to the local economy.

Challenges and Trends

1. Challenges:
   • Declining Loan Access: There was a 60.8% decrease in the number of women accessing loans in 2023 compared to 2022, from 69,926 to 33,485 beneficiaries. Similarly, youth beneficiaries also decreased by 57.0%, from 69,926 in 2022 to 33,485 in 2023.
   • This decline is primarily due to changes in the loan distribution model, where LGAs shifted from direct lending to bank-managed lending processes, aimed at increasing transparency, loan recovery, and accessibility. However, this shift may have caused delays or complicated loan access for some beneficiaries.
2. Opportunities:
   • The new bank-managed model could improve loan sustainability and collection efficiency, ensuring more responsible lending practices.
   • The increased focus on Zanzibar and the expansion of funding to MSMEs there offer opportunities for regional development, which could have a positive impact on the island’s economy.

Impacts of LGA Loans

1. Economic Empowerment:
   • These loans have played an instrumental role in providing economic opportunities to marginalized groups, especially women and youth, who traditionally face difficulties accessing finance.
   • By supporting local businesses, these loans contribute to poverty reduction, job creation, and the expansion of the informal sector.
2. Social Inclusion:
   • The targeted approach to lending, focusing on women, youth, and people with disabilities, enhances social inclusion and encourages equal participation in economic activities, helping to bridge the gender and generational gap in business ownership.

The local government authority loans in Tanzania, with TZS 43.94 billion disbursed to women and youth in 2023, are a vital component of the country’s financial inclusion strategy. Although challenges like a decline in loan access due to changes in loan management exist, the increased focus on vulnerable groups continues to drive economic empowerment and social inclusion. The shift towards bank-managed processes is a positive step toward sustainable financial support, which can strengthen Tanzania's economy and create more equitable opportunities for underserved populations.

Loans from Local Government Authorities (LGAs) in Tanzania (2023)

The data on loans from Local Government Authorities (LGAs) in Tanzania in 2023 reveals several key trends and insights:

1. Targeted Financial Inclusion

• The loans allocated to women and youth highlight Tanzania's commitment to promoting economic empowerment and financial inclusion for underserved groups. With TZS 43.94 billion disbursed to over 23,000 beneficiaries, this initiative is key in fostering entrepreneurship and job creation, particularly in vulnerable sectors like women and youth-owned businesses.

2. Regional Disparities and Focus

• The increase in Zanzibar loan disbursements to TZS 16.83 billion for 16,432 beneficiaries reflects a focused effort on regional development, targeting small businesses and entrepreneurs in Zanzibar, which often face greater barriers to financial access.
• This targeted support indicates that the government is recognizing the importance of regional economic development and ensuring that financial services reach beyond urban centers.

3. Shift in Loan Distribution Model

• The decline in the number of women and youth receiving loans due to the shift from direct lending to a bank-managed model shows a change in the distribution process. While the aim is to improve loan recovery and transparency, this shift appears to have led to temporary setbacks in accessibility, particularly for those who are less familiar with the banking system or face barriers in navigating it.
• The decreased number of loan recipients (60.8% fewer women and 57.0% fewer youth) suggests that some beneficiaries might have faced challenges in adapting to the new loan process, affecting overall loan uptake in the short term.

4. Economic and Social Empowerment

• Despite the challenges, these loans are having a positive social impact. By targeting women, youth, and people with disabilities, these schemes help bridge social gaps, ensuring that traditionally marginalized groups have access to resources needed for economic participation.
• This financial inclusion effort contributes to poverty reduction, business growth, and increased productivity, supporting the broader national goal of inclusive economic growth.

5. Long-Term Sustainability and Efficiency

• The shift to bank-managed loans may improve loan sustainability and recovery rates, making the program more efficient in the long term. Although there may be short-term access issues, this approach could lead to better financial discipline and more effective allocation of resources in the future.

The local government loans in Tanzania for 2023 highlight significant strides in financial inclusion and economic empowerment for vulnerable groups, particularly women and youth. However, the shift in the loan distribution model has created some temporary barriers, limiting access in the short term. Despite these challenges, the focus on marginalized populations and regional development reflects a commitment to equitable economic growth and the creation of a more inclusive financial ecosystem.

The long-term impact of these efforts will depend on how the new distribution model evolves and how the accessibility barriers for underserved groups can be addressed moving forward.

Digital loans have experienced significant growth in Tanzania, driven by mobile technology, increased phone ownership, and partnerships between banks, microfinance institutions, and mobile network operators (MNOs).

Key Statistics

1. Total Number of Digital Loan Accounts:
   • The number of digital loan accounts in Tanzania skyrocketed by 198% from 32.09 million in 2022 to 95.89 million in 2023.
   • This dramatic increase highlights a growing trend of digital borrowing, especially among low-income and rural populations who find traditional banking inaccessible.
2. Amount of Digital Credit Issued:
   • The total amount of digital credit issued in Tanzania surged from TZS 26.79 billion in 2022 to TZS 126.03 billion in 2023, marking a 370% increase.
   • This indicates that while the number of loans has grown significantly, the total value of loans issued has also risen, suggesting an increasing demand for larger loans.
3. Demographic Trends:
   • Men represent 66.5% of all digital loan borrowers, while women account for 33.5%. However, the number of women accessing digital loans is steadily increasing, indicating greater financial empowerment among women.
   • Youth and young adults (primarily those aged 18–35) make up a large proportion of digital loan borrowers, as they are more likely to use mobile phones and digital financial services.
4. Active Mobile Money Accounts:
   • The increase in mobile money accounts (from 38.34 million in 2022 to 51.72 million in 2023) has contributed to the growth of digital loan services, as digital loan products are typically linked to mobile wallets.
   • The growth in mobile money accounts and the availability of National Identification Numbers (NINs) have made it easier for more people to access mobile financial services.

Key Drivers of Growth

1. Technology and Mobile Penetration:
   • The expansion of 3G and 4G network coverage and the increased availability of smartphones have made digital loans more accessible to Tanzanians, particularly in rural areas.
   • The ease of instant loans via mobile platforms has allowed users to access credit without needing a bank account or physical collateral.
2. Partnerships between Banks and MNOs:
   • Many financial institutions have partnered with mobile network operators (MNOs) to offer digital loans. These partnerships leverage MNOs' extensive mobile money networks, enabling quicker disbursement and repayment of loans.
   • Artificial Intelligence (AI) is used to assess the creditworthiness of borrowers, allowing for faster loan approval processes based on transaction history and mobile phone usage.
3. Government Support:
   • Regulatory changes by the Bank of Tanzania (BoT) and other financial authorities have helped create a favorable environment for digital lending, supporting the development of mobile loan platforms and enhancing financial inclusion.

Impact of Digital Loans

1. Financial Inclusion:
   • Digital loans have significantly improved financial inclusion by providing access to credit for underserved populations, particularly in rural areas where traditional banks have limited reach.
   • The increased access to instant loans has enabled individuals to meet urgent financial needs, such as healthcare, education, or emergency expenses.
2. Economic Growth:
   • By giving small businesses and individuals access to capital, digital loans contribute to economic activity, especially for MSMEs and entrepreneurs who may otherwise struggle to access credit from traditional financial institutions.

Challenges and Opportunities

1. Challenges:
   • Despite their growth, digital loans often carry high-interest rates, which can burden borrowers, especially those in low-income segments.
   • There is also concern over the sustainability of digital lending models, as some borrowers may struggle to repay loans on time, leading to over-indebtedness.
2. Opportunities:
   • The growth of digital credit presents opportunities for further product innovation in micro-lending, especially targeting women and youth.
   • There is potential for regulatory improvements to balance the rapid growth of digital lending with consumer protection to ensure long-term stability and sustainability.

Conclusion

The surge in digital loans in Tanzania, with a 198% increase in loan accounts and a 370% rise in the value of loans, demonstrates the country's rapid adoption of mobile financial services. While digital loans have opened up new opportunities for financial inclusion, they also present challenges related to affordability and long-term sustainability. Continued innovation, coupled with regulatory oversight, will be key to maximizing the benefits of digital lending in Tanzania's evolving financial landscape.

In 2023, access to finance for MSMEs in Tanzania saw significant growth, with the number of MSME loan accounts rising by 21.9% to 176,213 and total loan values increasing by 16.2% to TZS 3,612.72 billion. This surge was driven by government-backed programs like the SME Credit Guarantee Scheme and local government loans, which collectively supported over 23,000 MSMEs, with TZS 43.94 billion disbursed. Despite these advances, challenges such as limited collateral and high borrowing costs continue to hinder some MSMEs from fully accessing financial services.

MSMEs Access to Finance in Tanzania (2023)

Micro, Small, and Medium Enterprises (MSMEs) in Tanzania have seen significant advancements in accessing finance, supported by tailored financial products, government initiatives, and public-private collaborations:

Key Statistics

1. Bank Loans to MSMEs:
   • The number of loan accounts held by MSMEs in the banking sector increased to 176,213 in 2023 from 144,522 in 2022, a growth of 21.9%.
   • The total value of these loans rose by 16.2%, from TZS 3,109.20 billion in 2022 to TZS 3,612.72 billion in 2023.
   • MSME loans accounted for 12% of the total loan portfolio in the banking sector.
2. Microfinance Loans:
   • Tier II microfinance service providers granted loans to 4.14 million MSMEs in 2023, compared to 5 million in 2022, showing a slight decline in the number of accounts.
   • However, the value of loans granted by these providers increased significantly by 39.15%, reaching TZS 749.99 billion in 2023.
3. Local Government Loans:
   • Local Government Authorities (LGAs) disbursed loans amounting to TZS 24.02 billion to 16,724 women and TZS 19.92 billion to 10,032 youth in 2023.
   • In Zanzibar, the Zanzibar Economic Empowerment Authority (ZEEA) provided loans to 16,432 beneficiaries in 2023, up from 3,980 in 2022, with the value increasing to TZS 16.83 billion.

Government Programs Supporting MSMEs

1. Small and Medium Enterprises Credit Guarantee Scheme (SME-CGS):
   • Administered by the Bank of Tanzania, this scheme facilitated loans for viable MSME projects lacking sufficient collateral.
2. NEEC and SIDO Programs:
   • Under the National Economic Empowerment Council (NEEC), loans to MSMEs increased from TZS 713.79 billion in 2022 to TZS 743.66 billion in 2023, benefiting 6.1 million MSMEs.
   • The Small Industries Development Organization (SIDO) issued TZS 17.76 billion in loans to MSMEs in 2023.
3. Zanzibar MSMEs Development Program:
   • A total of TZS 2.10 billion was disbursed to 18 MSME projects in Zanzibar in 2023.

Impact of Access to Finance

1. Economic Growth:
   • Enhanced access to credit enabled MSMEs to expand operations, contributing to job creation and economic development.
2. Formalization and Inclusivity:
   • Increased financial literacy and business formalization programs allowed more MSMEs, especially women-led and youth-led businesses, to participate in formal financial systems.
3. Support for Targeted Groups:
   • Government initiatives prioritized financing for underserved groups, including women and youth, fostering inclusivity in economic opportunities.

Challenges and Opportunities

• Challenges: Limited collateral, high lending costs, and urban-rural disparities remain obstacles.
• Opportunities: Expanding digital credit solutions and government-guaranteed schemes can further enhance MSMEs' financial access.

MSMEs Access to Finance in Tanzania (2023)

The data on MSMEs access to finance in Tanzania in 2023 highlights significant progress and emerging opportunities, as well as some challenges:

1. Growing Access to Finance for MSMEs

• Increase in Loan Accounts: The 21.9% growth in the number of MSME loan accounts (from 144,522 in 2022 to 176,213 in 2023) and the 16.2% rise in loan values reflect a positive trend in MSMEs' access to formal financial services. This suggests that more MSMEs are tapping into formal financing channels, indicating a growing confidence in the financial system.
• Rising Loan Values: The increase of TZS 503.52 billion in loan value for MSMEs (from TZS 3,109.20 billion in 2022 to TZS 3,612.72 billion in 2023) points to greater access to larger sums of credit, which can help fuel business growth, expansion, and innovation.

2. Strong Support from Government and Financial Institutions

• Government Schemes: The continuation and expansion of government programs like the SME-CGS, which allows MSMEs to access loans with lower collateral requirements, play a critical role in boosting financial access. Similarly, local government programs supporting women, youth, and MSMEs have helped create a more inclusive financial ecosystem.
• Local Government Loans: Disbursements from Local Government Authorities (LGAs), totaling TZS 43.94 billion to over 23,000 MSME owners (across women and youth), show targeted efforts to empower underserved groups. This indicates focused governmental efforts to integrate vulnerable populations into the formal financial system.

3. Increased Focus on Financial Inclusion

• The 39.15% increase in loan value from Tier II microfinance institutions (from TZS 539.84 billion in 2022 to TZS 749.99 billion in 2023) signifies that microfinance remains an essential pillar for MSMEs, particularly for smaller or informal businesses that face more significant barriers in accessing bank loans.
• Zanzibar MSME Development: The TZS 2.10 billion allocated to 18 MSME projects in Zanzibar highlights the government's regional and local focus on inclusivity, ensuring that MSMEs across the country benefit from financial access, not just in larger urban areas.

4. Continued Challenges

• Collateral and High Costs: Despite the increases in access to credit, many MSMEs, particularly in rural areas, still face difficulties accessing loans due to lack of collateral and the high cost of credit. This limits the growth potential of some businesses, especially smaller and informal ones.
• Disparities Between Sectors: There remains a gap between larger and smaller MSMEs in accessing finance, with smaller businesses still relying heavily on microfinance institutions or government-backed loans, rather than banks.

5. Significant Economic and Social Impact

• Economic Growth and Job Creation: Increased access to finance enables MSMEs to expand operations, improve productivity, and generate employment. This supports Tanzania’s economic growth and job creation in the informal and formal sectors.
• Focus on Women and Youth: Government-targeted schemes are fostering economic empowerment for women and youth, key drivers of sustainable development, by enabling these groups to establish and scale businesses, contributing to social inclusion and gender equality.

Conclusion

The progress in MSMEs' access to finance in Tanzania in 2023 tells a story of positive growth, government commitment, and increased financial inclusion. While challenges like collateral requirements and high loan costs persist, the growing access to financial products, combined with targeted initiatives for women, youth, and smallholder farmers, highlights Tanzania’s path toward fostering a more inclusive and vibrant economy. The increased focus on microfinance and government programs also indicates a shift towards supporting underserved sectors, ensuring that more businesses, especially in rural areas, can thrive.

Between 2019 and 2023, Tanzania's financial landscape experienced remarkable growth, with total financial access points increasing by 130%, from 609,956 in 2019 to 1,402,609 in 2023. This expansion was driven by a 116% rise in mobile money agents (from 573,444 to 1,240,106) and a 365% growth in bank agents (from 28,358 to 106,176). The country’s financial inclusion rate improved from 65% in 2017 to 76% in 2023, showcasing the success of digital innovations and policy reforms under the National Financial Inclusion Framework. This growth underscores Tanzania's commitment to bridging the financial access gap, particularly in underserved areas.

Financial Services Providers Landscape in Tanzania

Tanzania's financial services landscape is diverse and rapidly growing, driven by digital innovations and regulatory improvements. The sector comprises banking institutions, microfinance, insurance, capital markets, and payment service providers:

Access to Financial Services

• Banking Services:
  • Number of bank agents grew from 28,358 in 2019 to 106,176 in 2023.
  • Banking access points increased to 107,238 in 2023, driven by reforms in agent banking.
• Microfinance Institutions (MFIs):
  • Access points reached 51,253 in 2023, marking a 31% annual growth.
  • Community Microfinance Groups (CMGs) dominate with 48,659 access points, reflecting a formalization trend.
• Payment Services:
  • Mobile money agents grew by 19.4% to 1.24 million in 2023.
  • Mobile money accounts increased by 34.9% to 51.72 million.

Usage of Financial Services

• Savings:
  • Banking sector savings reached TZS 6.99 trillion, an 18.1% increase.
  • Savings accounts in SACCOs decreased in value to TZS 870 billion, as some members preferred borrowing.
• Credit:
  • Total bank loans grew by 24.4% to TZS 33.10 trillion.
  • SACCOs' loans amounted to TZS 1.12 trillion, a 3.7% increase.
• Insurance:
  • Policyholders increased by 94.4% to 7.68 million, mainly due to mandatory motor insurance and health coverage expansion.
• Capital Markets:
  • Investors in securities increased by 12.5% to 907,969, supported by technology-enabled platforms.

Growth Drivers

1. Digital Financial Services: The rise of mobile money and online platforms improved accessibility and efficiency.
2. Policy Frameworks: The National Financial Inclusion Framework (2023-2028) prioritized underserved populations.
3. Regulatory Enhancements: New guidelines fostered innovations, such as digital insurance platforms and microfinance formalization.
4. Government Programs: Local Government Authority loans provided TZS 24.02 billion to women and TZS 19.92 billion to youth in 2023.

Total Number of Financial Access Points in Tanzania (2019–2023)

The number of financial access points in Tanzania grew significantly between 2019 and 2023, driven by expansion across banking, microfinance, insurance, and payment systems:

Overall Growth

• In 2019, Tanzania had 609,956 financial access points.
• By 2023, this number increased to 1,402,609, representing a 130% growth over the period.

Yearly Breakdown of Access Points

Sector-wise Contribution

1. Banking Services:
   • Grew from 29,371 access points in 2019 to 107,238 in 2023.
   • Bank agents contributed most to this increase, quadrupling during the period.
2. Microfinance Services:
   • Increased from 6,241 access points in 2019 to 53,371 in 2023, driven by the formalization of Community Microfinance Groups (CMGs).
3. Insurance Services:
   • Access points rose from 795 in 2019 to 1,495 in 2023, a 88% growth, fueled by digital platforms and bancassurance agents.
4. Payment Systems (Non-Bank):
   • Dominated the landscape, growing from 573,444 access points in 2019 to 1,240,106 in 2023, representing 116% growth.
   • Mobile money agents were the largest contributors.
5. Capital Markets Services:
   • Modest growth from 91 access points in 2019 to 380 in 2023, reflecting a focus on investment advisory and fund management.
6. Social Security Services:
   • Grew slightly from 14 access points in 2019 to 19 in 2023, limited by the niche nature of this sector.

Key Drivers of Growth

• Digital Transformation: Mobile money platforms and digital payment systems rapidly increased access.
• Policy and Regulation: The implementation of the National Financial Inclusion Framework (NFIF) facilitated formalization and innovation.
• Public-Private Partnerships: Collaboration with stakeholders such as banks, microfinance institutions, and insurers expanded reach.

Implications

The steady increase in financial access points reflects Tanzania's progress in financial inclusion, ensuring more adults live within a 5 km radius of financial services (89% in 2023, up from 86% in 2017).

Insights from Tanzania's Financial Services Providers Landscape (2023) and Financial Access Points (2019–2023)

1. Strong Progress in Financial Inclusion

The rapid growth in financial access points and the diversification of financial service providers illustrate Tanzania's consistent strides in financial inclusion. The financial inclusion rate increased from 65% in 2017 to 76% in 2023, demonstrating that more Tanzanians are accessing formal financial services.

2. Dominance of Digital Financial Services

• The exponential growth in mobile money agents (from 573,444 in 2019 to 1,240,106 in 2023) highlights how digital financial services dominate the financial landscape.
• Digital innovations, such as mobile money, are bridging the gap in rural and underserved areas, making financial services more accessible and affordable.

3. Role of Policy and Regulation

• The implementation of frameworks like the National Financial Inclusion Framework (NFIF-3, 2023–2028), along with regulatory reforms for digital platforms, insurance, and microfinance, has created an enabling environment for growth.
• This alignment between public and private stakeholders reflects a focused approach to tackling barriers to financial access.

4. Significant Growth in Banking Services

• The growth in banking agents (from 28,358 in 2019 to 106,176 in 2023) shows that agent banking reforms have effectively decentralized banking, bringing services closer to people, especially in rural areas.

5. Increased Focus on Underserved Segments

• Initiatives targeting women, youth, MSMEs, and smallholder farmers have driven tailored products, like women-friendly savings accounts and micro-loans, showcasing a shift towards inclusive financial services.

6. Opportunities in Microfinance and Capital Markets

• The formalization of Community Microfinance Groups (CMGs) and the growth of capital markets (e.g., fund managers and collective investment schemes) indicate untapped potential for rural financing and investment.

7. Persistent Challenges

• Despite improvements, certain challenges persist:
  • Social security services access points remain limited (only 19 access points in 2023).
  • Urban-rural disparities still exist, as infrastructure in rural areas lags behind urban centers.
  • Low uptake of advanced financial services like pensions and insurance, indicating a need for more public awareness and tailored products.

8. Economic and Social Impacts

• Economic Growth: With credit values increasing by 24.4% in banks and 3.7% in SACCOs in 2023, the financial sector has become a key driver of economic growth by mobilizing savings and enabling trade.
• Social Benefits: Financial inclusion efforts have empowered previously underserved populations, enhancing their ability to save, invest, and access credit.

Key Takeaways

1. Growth with Innovation: The financial services landscape in Tanzania is becoming increasingly diversified, with digital financial services leading the charge.
2. Policy as a Catalyst: The alignment of policy, innovation, and private-sector initiatives ensures sustainable growth in financial inclusion.
3. Targeted Efforts are Essential: Continued focus on underserved segments like rural populations and MSMEs is crucial for equitable economic growth.

Tanzania’s tourism sector has demonstrated remarkable resilience and growth over the past decade. From steady increases in visitor numbers pre-COVID-19 to a sharp decline during the pandemic, the industry has rebounded with record-breaking arrivals in 2023. Key source markets span East Africa, Western countries, and emerging Asian economies, reflecting diverse appeal. With ongoing recovery efforts and strategic investments, Tanzania is poised to solidify its position as a premier global destination, projecting visitor numbers to reach up to 3 million by 2030.

Annual Visitor Numbers (2015–2024)

Key Trends:

1. Steady Growth (2015–2019)
   • Annual growth rates ranged from 3.3% to 13.5%.
   • Peak number in 2019: 1,510,151 visitors, before the COVID-19 pandemic.
2. COVID-19 Impact (2020)
   • Visitor numbers fell by 58.9%, down to 620,867.
3. Recovery Phase (2021–2023)
   • 2021: A 48.6% recovery, reaching 922,692 visitors.
   • 2022: A robust 57.7% growth, reaching 1,454,920 visitors.
   • 2023: Achieved a record high of 1,806,359 visitors (24.2% growth).
4. 2024 Partial Data
   • Current visitor numbers stand at 1,560,641, with potential to grow depending on the remaining months.

Visitor Distribution (2024):

Top Source Markets

• East Africa:
  • Kenya: 156,674 visitors (10% of total visitors).
  • Burundi: 153,497 visitors (9.8% of total visitors).
• Western Countries:
  • USA: 112,579 visitors (7.2%).
  • France, Germany, Italy, UK: Combined total 297,823 visitors (19% of total visitors).
• Asian Markets:
  • China: 54,284 visitors (3.5%).
  • India: 48,679 visitors (3.1%).
• Other African Countries:
  • DRC: 49,963 visitors (3.2%).

Key Observations and Insights

1. Regional Breakdown:
   • East African countries dominate tourism numbers, highlighting strong regional ties and cross-border travel.
   • Western nations account for significant long-haul arrivals, driven by Tanzania’s appeal for safari and wildlife tourism.
   • Asian markets, though smaller, show consistent growth, reflecting the global rise in outbound tourism from China and India.
2. Economic Impacts of COVID-19:
   • Tourism's sharp decline in 2020 significantly affected GDP, foreign exchange earnings, and employment. The partial recovery in 2021 was supported by eased travel restrictions and successful vaccination campaigns globally.
3. Projected Growth (to 2030):
   • Assuming 8% annual growth, visitor numbers could rise to:
     • 2025: 1.94 million visitors.
     • 2030: 2.5–3 million visitors.
   • These projections hinge on stability in global travel trends, infrastructure improvement, and marketing efforts.

Figures for Context:

• Compound Growth Analysis (2015–2019):
  • Total visitors in 2015: 1,137,182.
  • Total visitors in 2019: 1,510,151.
  • Cumulative growth: 32.8%.
• Post-COVID Growth (2020–2023):
  • Visitors in 2020: 620,867.
  • Visitors in 2023: 1,806,359.
  • Cumulative recovery: 191%.
• Market Contributions (2024 Partial Year):
  • Top 5 countries combined contribute 652,850 visitors, accounting for 41.8% of total visitors.

Strategic Recommendations for Growth

1. Market Diversification: Focus on attracting more visitors from emerging markets such as India and China.
2. Infrastructure Investment: Improve airports, roads, and tourist facilities to enhance the visitor experience.
3. Marketing Campaigns: Strengthen digital marketing and participation in global travel expos targeting high-potential markets like Western Europe and North America.
4. Regional Collaboration: Leverage the East African Community (EAC) framework to promote cross-border tourism packages.

The detailed analysis of Tanzania's tourism data reveals several critical insights:

1. Steady Pre-COVID Growth (2015–2019)

• Tanzania experienced consistent growth in tourism numbers before the pandemic, indicating a positive trajectory driven by:
  • Increased global awareness of Tanzania’s attractions, including Serengeti, Zanzibar, and Mount Kilimanjaro.
  • Improved marketing efforts and participation in international tourism expos.
  • Political stability and regional peace.

What it tells:
Tourism was becoming a critical driver of Tanzania’s economy, contributing significantly to GDP and employment. The country's reputation as a premier safari and cultural tourism destination was solidifying globally.

2. Severe Impact of COVID-19 (2020)

• The sharp decline (58.9%) in visitor numbers in 2020 reflects:
  • The global halt in travel due to lockdowns and health concerns.
  • Dependency on international markets, which were heavily disrupted.

Tanzania’s tourism industry is vulnerable to global disruptions. A lack of domestic tourism reliance and a high dependence on international travelers amplified the economic shock.

3. Robust Recovery (2021–2023)

• The recovery trend, with record numbers in 2023, highlights:
  • Resilience of the tourism sector and effective reopening strategies.
  • Strong demand for travel to natural and open-space destinations post-pandemic.

Tanzania’s tourism appeal remains strong. Efforts to restore confidence, including health safety measures and international marketing campaigns, were successful.

4. Changing Source Markets (2024 Data)

• The dominance of East African countries (Kenya, Burundi) in visitor numbers suggests:
  • Cross-border ease of travel and cultural ties.
  • Growing regional tourism contributing to stability in numbers.
• Significant representation from Western countries (USA, France, Germany, UK) shows:
  • Continued global interest in Tanzania’s wildlife and safari offerings.
• Contributions from China and India point to growing engagement with emerging markets.

There’s a balanced mix of regional and international visitors, reducing over-reliance on any single market. However, opportunities exist to further tap into Asian and regional tourism.

5. Growth Projections (2025–2030)

• Assuming 8% annual growth, reaching 2.5–3 million visitors by 2030 is feasible, driven by:
  • Continued investment in tourism infrastructure.
  • Expanding marketing efforts globally.
  • Enhancing offerings to cater to diverse visitor interests.

Tanzania has immense potential for growth, but achieving these projections will require addressing challenges like infrastructure gaps, environmental sustainability, and competition from other African destinations.

6. Tourism’s Economic Role

• A high reliance on tourism emphasizes its role as:
  • A major foreign exchange earner.
  • A significant employer in sectors like hospitality, transport, and craft industries.

Tourism is a pillar of Tanzania’s economic growth. Diversifying products (e.g., eco-tourism, cultural tourism) and markets will make the sector more resilient.

Overall Takeaways

• Tanzania’s tourism industry has strong foundations, with an upward growth trajectory disrupted only by COVID-19.
• The industry is diversifying in source markets, but further efforts are needed to enhance sustainability and reduce vulnerabilities to global shocks.
• Strategic investments and innovative marketing will ensure Tanzania remains competitive in the global tourism landscape.

Tanzania's Tourism Trends: Growth, Challenges, and Opportunities

Annual Tourism Numbers (2015–2024)

Top 10 Countries Visiting Tanzania in 2024

Key Observations

• Steady Growth Pre-COVID (2015–2019): Tourism numbers grew consistently with the highest growth rates in 2016 (13%) and 2018 (13.5%).
• COVID-19 Impact (2020): Visitor numbers dropped drastically by 58.9% due to global travel restrictions.
• Post-COVID Recovery: A strong recovery trajectory began in 2021, with 2023 recording the highest annual visitors to date.
• Regional Importance: East African countries (Kenya and Burundi) dominate the top source markets, contributing significantly to overall visitor numbers.
• Western and Asian Contributions: Western countries (USA, France, Germany, Italy, UK) and Asian markets (China, India) make up a substantial portion of international tourists.

Projection to 2030

• With an assumed 8% annual growth rate, Tanzania’s tourism numbers could reach approximately 2.5–3 million visitors by 2030, contingent on stable global conditions and effective marketing efforts.

Note: *2024 data is partial and may be updated with end-of-year statistics.

In September 2024, Tanzania's bank lending rate rose slightly to 12.92% from 12.79% in August, reflecting cautious adjustments in monetary policy. This rate, slightly below the long-term average of 13.09%, highlights the Bank of Tanzania's efforts to manage inflation and stabilize the economy while maintaining a moderately high cost of borrowing for businesses and consumers.

1. Current Trends (2024)

• In September 2024, the bank lending rate increased to 12.92%, up slightly from 12.79% in August 2024.
• This indicates a monthly increase of 0.13 percentage points, reflecting a tightening of credit conditions or adjustments to monetary policy.

2. Historical Averages (2003-2024)

• Over the last 21 years, the average bank lending rate in Tanzania has been 13.09%.
• This average suggests that the current lending rate of 12.92% is slightly below the long-term trend, signaling a relatively moderate borrowing cost in the historical context.

3. Extreme Values

• Highest Rate: The lending rate peaked at 17.91% in September 2017, likely due to monetary tightening or inflation control measures.
• Lowest Rate: The lending rate hit a record low of 7.53% in March 2004, reflecting favorable credit conditions and possibly expansive monetary policy.

4. Insights from Changes

• The recent uptick in 2024 may indicate cautious monetary policy adjustments, aiming to balance economic growth with inflation control.
• Historical fluctuations reflect responses to various economic conditions, including:
  • Inflation trends: High lending rates often align with inflationary pressures.
  • Monetary policy stance: Changes in the Central Bank’s policies to control liquidity and stabilize the Tanzanian shilling.
  • Economic growth phases: Lower rates during growth-supportive periods and higher rates during economic cooling.

5. Implications for Borrowers and Businesses

• At 12.92%, borrowing costs remain significant for businesses and consumers.
• Compared to the record high of 17.91%, the current rate offers some relief, but it’s still far from the record low of 7.53%.

The bank lending rate data for Tanzania tells several important economic and monetary policy stories:

1. Monetary Policy Trends

• Current Tightening: The slight increase from 12.79% to 12.92% in September 2024 suggests that the Bank of Tanzania is either:
  • Managing inflation risks.
  • Controlling excessive credit growth.
• This indicates a cautious tightening or stabilization phase in monetary policy.

2. Credit Environment

• Borrowing Costs: A lending rate of 12.92% reflects a relatively high cost of borrowing, which can:
  • Discourage excessive credit growth, curbing inflation.
  • Limit small businesses and consumers’ ability to access affordable loans.
• Compared to historical lows (7.53% in 2004), current rates make credit more expensive, potentially affecting economic activity.

3. Historical Context

• Long-Term Average (13.09%):
  • The current rate is slightly below the historical average, suggesting that borrowing conditions are moderately stable but not overly restrictive.
• Extreme Variations:
  • The record high (17.91% in 2017) occurred during a period of high inflation and stringent monetary policy.
  • The record low (7.53% in 2004) reflects a time of looser monetary policy aimed at boosting economic growth.

4. Implications for Economic Growth

• For Businesses:
  • High lending rates increase the cost of capital, particularly for sectors dependent on bank loans, such as SMEs and agriculture.
  • Limits expansion plans and investment in capital-intensive projects.
• For Consumers:
  • Higher rates increase borrowing costs, impacting personal loans, mortgages, and spending power.

5. Signals to Stakeholders

• To Policymakers: The Bank of Tanzania might be balancing inflationary pressures against the need to support economic growth. Maintaining rates slightly below the long-term average reflects a careful approach.
• To Investors: A moderately high lending rate suggests a relatively stable financial system, but caution is needed in sectors sensitive to borrowing costs.
• To the Public: Fluctuations in rates can affect consumer confidence, especially if they expect prolonged high borrowing costs.