Introduction

Tanzania's recent tax reforms and policy adjustments are creating transformative shifts in its economic landscape. The fiscal year 2023/2024 witnessed a tax revenue increase of 14.47%, reaching TZS 27.64 trillion, underscoring a robust yet evolving economic environment. While achieving substantial growth, Tanzania still faces challenges in compliance, investment attraction, and equitable contributions across sectors.

Key Achievements and Challenges

1. Tax Revenue Growth and Sector Contributions
   • Tax revenue rose by TZS 3.5 trillion from the previous year, with the services sector leading at 28.2% of contributions (TZS 7.8 trillion), followed by trade (23.6%) and manufacturing (17.7%).
   • The agriculture sector, employing over 65% of the workforce, accounted for only 5.6% of the revenue. This discrepancy calls for reforms to harness agriculture’s full economic potential.

Figure 1: Tax Contribution by Sector

1. Services: 28.2%
2. Trade: 23.6%
3. Manufacturing: 17.7%
4. Agriculture: 5.6%
5. Compliance and Ease of Doing Business
   • Compliance costs average 2% of annual revenues, disproportionately burdening SMEs, which also face challenges from regulatory complexity and frequent policy shifts.
   • Tanzania’s Ease of Doing Business score stands at 59, reflecting moderate barriers such as high corporate tax rates (30%) compared to Kenya’s 25%.
6. Investment Climate and Foreign Direct Investment (FDI)
   • FDI inflows in 2024 reached USD 1.5 billion, primarily in agriculture, energy, and mining, with an anticipated 10% annual growth.
   • Persistent issues include regulatory inconsistencies and limited infrastructure, particularly in transportation and energy.

Future Projections and Policy Recommendations

1. Growth Projections for 2030
   • Tax revenue is expected to almost double to TZS 40 trillion.
   • FDI inflows may reach USD 2.8 billion with regulatory enhancements.
   • The Ease of Doing Business score could improve to 70 through streamlined tax systems.

Figure 2: 2030 Projections

1. Tax Revenue: TZS 40 trillion
2. FDI Inflows: USD 2.8 billion
3. Agricultural Growth: 8% annually
4. Manufacturing Growth: 7% annually
5. Policy Recommendations
   • Simplify Tax Processes: Streamline procedures for SMEs, reducing compliance costs.
   • Educate and Empower: Raise awareness about tax incentives to increase accessibility for businesses.
   • Focus on Inclusivity: Extend support to the informal economy to integrate it into the formal tax system.
   • Stabilize Regulatory Environment: Predictable policies can foster investor confidence and long-term planning.

Conclusion

Tax reforms and policy planning remain central to Tanzania’s economic trajectory. By addressing systemic barriers and promoting inclusivity, the country can unlock sustained growth across key sectors like agriculture, tourism, and manufacturing. Proactive reforms could establish Tanzania as a competitive investment destination in East Africa.

Tanzania stands at a pivotal moment in its economic evolution, with the employment landscape undergoing a gradual transformation from a predominantly informal workforce toward increased formalization. This shift promises enhanced economic stability, improved social welfare, and better tax revenue collection for national development.

Current Employment Dynamics

As of 2024, Tanzania’s workforce reflects a striking division:

• Formal Sector: 10.17 million workers (28% of the workforce), primarily in private companies (91.75% of formal jobs).
• Informal Sector: 25.95 million workers (72%), dominated by agriculture and fishing (65–70%), retail and commerce (10–15%), and manufacturing (5–8%).

The unemployment rate, measured at 8.9% in 2022, represents a slight decline from 9% in 2021 and is projected to improve further, reaching 8.1% by 2030.

Formalization’s Role in Economic Development

The drive to increase formal employment, targeting a rise from 28% in 2024 to 38% by 2030, is accompanied by several advantages:

1. Tax Revenue Growth: Formal sector taxes already contribute over TZS 27.64 trillion annually, fueling public services and infrastructure development.
2. Social Protections: Expansion in formal employment ensures broader access to pensions, health insurance, and job security.
3. Economic Planning: A formal workforce aids accurate economic monitoring, investment planning, and resource allocation.

Sectoral Transformation

By 2030, formal sector employment is expected to diversify:

• Manufacturing and industry: 25% (3.95 million jobs)
• Services and tourism: 22% (3.48 million jobs)
• Modern agriculture: 20% (3.16 million jobs)

Conversely, the informal sector will remain significant, with traditional agriculture comprising 55% of informal jobs (approximately 14.18 million).

Challenges in Formalization

Tanzania faces several obstacles in its formalization journey:

• Resistance from Informal Entities: Many businesses perceive formalization as cumbersome or costly.
• Skill Gaps: Workforce readiness for formal roles remains insufficient.
• Infrastructure Deficits: Regional disparities in infrastructure limit growth opportunities.

Regional and Demographic Insights

Regions such as Dar es Salaam and Mwanza illustrate the current dichotomy. In Dar es Salaam, out of a total workforce of 5.38 million:

• 785,674 workers (14.6%) are in formal employment.
• 2.02 million (85.4%) are in informal jobs.

Policy Recommendations

1. Streamlining Business Registration: Simplified procedures can incentivize formalization.
2. Agricultural Modernization: Integrating rural workers into formal value chains can foster productivity.
3. Skill Development: Aligning educational programs with formal sector needs is vital.
4. Digital Transformation: Investments in digital tools for SMEs can create pathways from informal to formal business practices.

Future Projections

Future Projections Summary:

Tanzania's employment landscape is projected to shift significantly between 2024 and 2030, emphasizing formalization:

1. Current Employment (2024):
   • Formal Employment: 28%
   • Informal Employment: 71.8%
2. Target for 2030:
   • Formal Employment: 38%
   • Informal Employment: 62%

Conclusion

Tanzania’s transition to a formalized workforce marks a significant step in its economic development strategy. Achieving inclusive growth, however, will require targeted investments, infrastructural improvements, and effective policy execution. By addressing challenges and leveraging opportunities, the nation can secure sustainable development and improved living standards for its citizens.

Introduction
Public-Private Partnerships (PPPs) are central to Tanzania’s strategy for achieving sustainable development and economic transformation. Through innovative financial models and collaboration, the government aims to address infrastructure, energy, and social challenges while leveraging private sector efficiency and capital. These partnerships are aligned with Tanzania’s Vision 2025, focusing on inclusivity and growth.

Development Budget and Cost-Sharing Model
From 2021/22 to 2024/25, Tanzania allocated 54.575 trillion TZS to development projects, with 33.794 trillion TZS sourced domestically. The government employs an 80-20 cost-sharing model, where 80% of project funding is contributed by the private sector, significantly reducing the government’s financial burden. This model not only minimizes upfront costs but also allocates risk, with the private sector absorbing potential project overruns.

The development plan is expected to create approximately 10,000 jobs, with 8,000 positions in the private sector. Moreover, it is anticipated to boost annual economic output by 1 trillion TZS, enhancing Tanzania’s position as a regional economic hub.

Major Projects and Their Impact

1. Infrastructure Development
   • The Standard Gauge Railway enhances regional connectivity, fostering trade and reducing transport costs.
   • The Kigongo-Busisi Bridge facilitates commerce in the Lake Zone by improving accessibility.
   • The Msalato International Airport expands international connectivity, promoting tourism and trade.
2. Energy Projects
   • The Julius Nyerere Hydropower Project, with a capacity of 2,115 MW, stabilizes Tanzania’s energy supply, supporting industrial growth.
   • Rural electrification initiatives aim to provide universal energy access, particularly benefiting underserved rural communities.
3. Social Investments
   Investments in education and healthcare infrastructure are improving access to essential services. The government’s commitment to fee-free basic education and enhanced healthcare services highlights its dedication to uplifting the quality of life for citizens.

The Julius Nyerere Hydropower Project alone is projected to generate 31.725 billion TZS in annual revenue, showcasing the financial efficiency of PPP initiatives.

Comparative Insights from Africa
Tanzania’s PPP model mirrors successful regional practices. For instance, Kenya’s Nairobi Expressway, funded 80% by the private sector, has significantly reduced traffic congestion while generating $25 million in annual toll revenue. Similarly, Rwanda’s Kigali Innovation City has created 50,000 digital jobs, boosting the country’s tech ecosystem. Morocco’s Noor Solar Power Complex demonstrates the environmental benefits of PPPs, powering two million homes and reducing carbon emissions by 760,000 tons annually.

These examples highlight the potential for Tanzania to replicate such successes, particularly in renewable energy, transportation, and technology sectors.

Recommendations for Strengthening Tanzania’s PPPs

1. Sectoral Priorities:
   Focus on critical areas such as transportation, renewable energy, water supply, and digital transformation to ensure long-term sustainability and social impact.
2. Regulatory Enhancements:
   Establish clear frameworks and standardized contracts to improve project consistency and build investor confidence.
3. Public Awareness:
   Engage communities through education campaigns on PPP benefits to foster acceptance and reduce resistance to development projects.
4. Risk Management:
   Allocate risks effectively between public and private partners, ensuring stability and balanced collaboration.

Conclusion
Tanzania’s strategic use of PPPs is transforming its economic landscape, fostering job creation, enhancing infrastructure, and improving access to essential services. Flagship projects like the Standard Gauge Railway and Julius Nyerere Hydropower Project underscore the potential of PPPs to drive economic growth and inclusivity. By addressing challenges such as regulatory gaps and expanding partnerships to sectors like healthcare and education, Tanzania can solidify its position as a regional leader in sustainable development.

Regional and Continental Insights

Tanzania's recent activities with the International Monetary Fund (IMF) underscore its proactive approach to using external financing for economic growth and stability. As of December 25, 2024, Tanzania has a total outstanding IMF credit of $1.009 billion, with $155.99 million in new disbursements during December 2024. This positioning highlights Tanzania as a key player in East Africa, actively addressing immediate economic challenges while also setting its sights on long-term development. Below is a detailed analysis of Tanzania's performance compared to other East African and African countries, offering valuable insights into its regional and continental positioning.

Tanzania's Position in East Africa

Tanzania is performing strongly among East African nations. Here's how Tanzania compares to its neighbors:

Tanzania:

• Total Outstanding Credit (Dec 25, 2024): $1,009,260,000
• Disbursements (Dec 1–25, 2024): $155,990,000
• Repayments (Dec 1–25, 2024): $0

East African Peers:

1. Kenya:
   • Outstanding Credit: $3,022,009,900
   • Disbursements: $0
   • Repayments: $0 Kenya holds significantly higher outstanding IMF credit than Tanzania but did not receive any new disbursements in this period.
2. Uganda:
   • Outstanding Credit: $992,750,000
   • Disbursements: $0
   • Repayments: $0 Uganda’s outstanding credit is slightly lower than Tanzania's, and no disbursements or repayments occurred during the period.
3. Rwanda:
   • Outstanding Credit: $614,767,500
   • Disbursements: $138,626,360
   • Repayments: $0 Rwanda has received notable disbursements, but its total outstanding credit remains lower than Tanzania’s.
4. Burundi:
   • Outstanding Credit: $100,600,000
   • Disbursements: $0
   • Repayments: $0 Burundi’s outstanding credit is significantly lower than Tanzania's, and there has been no activity in disbursements or repayments.
5. South Sudan:
   • Outstanding Credit: $246,000,000
   • Disbursements: $0
   • Repayments: $0 South Sudan's outstanding credit is also lower than Tanzania’s.

Summary for East Africa:
Tanzania ranks second in terms of outstanding IMF credit after Kenya but leads in disbursements for the period, demonstrating an active engagement with IMF resources for economic support.

Tanzania's Position in Africa

While Tanzania’s outstanding credit is moderate compared to other African countries, it is crucial to understand its position relative to some of Africa’s larger economies.

Top African Economies:

• Egypt: $8,741,181,682
• South Africa: $1,144,200,000
• Nigeria: $613,625,000

Comparable Countries:

• Ghana: $2,514,421,000
• Mozambique: $553,800,000
• Zambia: $992,860,000

Key Figures:

• Total Outstanding Credit in Africa: At $1.009 billion, Tanzania’s total credit places it among the moderate credit borrowers in Africa.
• Disbursements: Tanzania’s $155.99 million in disbursements ranks among the highest in Africa for the period, comparable to Ghana and Rwanda.
• Repayments: Tanzania made no repayments during the period, similar to most East African countries.

Insights

1. Tanzania’s Growing Dependence on IMF Support

Tanzania's $155.99 million in new disbursements suggests an increasing reliance on IMF funding. This support is likely directed at addressing budget deficits, financing economic reforms, or driving infrastructure projects that are critical for the country’s growth. The total outstanding credit of $1.009 billion is moderate compared to larger African economies like Egypt and South Africa but indicates Tanzania’s growing dependence on external financing.

2. Regional Competitiveness (East Africa)

Tanzania ranks as the second-largest borrower in East Africa, with $1.009 billion in outstanding IMF credit, trailing behind Kenya’s $3.02 billion. However, Tanzania’s high disbursements of $155.99 million indicate a more active utilization of IMF resources compared to Kenya, which did not receive any new IMF loans during this period. This proactive financial management puts Tanzania in a strong position to leverage external resources for sustainable development.

3. Tanzania’s Position in Africa

Tanzania occupies a balanced position in Africa. Its $1.009 billion in outstanding IMF credit is far below the levels seen in Egypt and South Africa, which have more significant credit exposures. However, Tanzania’s engagement with the IMF through substantial disbursements signals a robust and strategic use of external resources to finance economic reforms and projects critical for long-term growth.

4. Economic Implications

The high disbursements Tanzania has received suggest the country is channeling IMF funds into critical sectors such as energy, agriculture, and infrastructure. While the absence of repayments indicates a focus on securing resources for immediate needs rather than servicing debt, it highlights potential financial pressure. Despite this, Tanzania’s moderate debt load compared to larger economies provides a buffer to manage repayment obligations effectively in the future.

Broader Themes for Tanzania

1. Growth Potential

Tanzania’s active engagement with the IMF and strategic borrowing position the country to drive economic growth. By utilizing IMF resources, particularly in sectors requiring external capital, Tanzania is laying the groundwork for future growth.

2. Caution on Debt Management

While Tanzania’s debt levels are moderate, its increasing reliance on external financing must be closely monitored. This trend could potentially pose risks if not managed prudently, especially in the face of global economic volatility.

3. Leadership in East Africa

Tanzania’s strategic borrowing places it in a leadership role in East Africa, using IMF resources effectively to support its development agenda. This could enhance its regional influence and attract additional international support.

Conclusion

Tanzania’s strategic use of IMF resources demonstrates its proactive approach to managing economic challenges and fostering long-term growth. While its debt levels remain manageable, continued borrowing suggests the need for careful fiscal planning to ensure sustainability and maximize the benefits of these funds. Regionally, Tanzania is emerging as a leader in leveraging IMF support, setting an example for other East African nations in utilizing international resources for national development.

Tanzania’s engagement with the IMF is not just about addressing short-term challenges—it reflects a long-term vision of economic transformation and stability. By balancing the need for external financing with fiscal responsibility, Tanzania is paving the way for a prosperous future.

Tanzania maintained a stable annual headline inflation rate of 3.0% in November 2024, reflecting effective monetary management. However, rising costs in key categories such as food and energy signal emerging price pressures. With food inflation increasing to 3.3% and energy costs up by 5.7%, these shifts highlight the need for proactive measures to safeguard household welfare and economic resilience.

National Consumer Price Index (NCPI) report for November 2024 for Tanzania, incorporating the key findings and figures provided:

1. Headline Inflation

• The annual headline inflation rate remained at 3.0% in November 2024, unchanged from October 2024, indicating price stability.
• The overall NCPI index rose from 112.67 in November 2023 to 116.05 in November 2024, showing a year-on-year increase of 3.0% in consumer prices.

2. Food and Non-Alcoholic Beverages

• Annual Inflation Rate: Increased to 3.3% in November 2024, up from 2.5% in October 2024.
• This category carries significant importance, with a weight of 28.2% in the NCPI.
• Monthly Price Movement: Prices rose by 1.2% from October to November 2024, reflecting seasonal and supply-side influences.

Significant food price increases (October–November 2024):

• Finger millet grains: +4.2%
• Maize grains: +4.1%
• Fresh fish: +4.4%
• Groundnuts: +5.0%
• Beef meat: +3.5%
• Fresh cassava: +3.3%

3. Core Inflation

• Definition: Core inflation excludes volatile and seasonal items, focusing on a stable consumption basket (e.g., processed foods, clothing, personal care items).
• Annual Rate: Increased slightly to 3.3% in November from 3.2% in October 2024.
• Coverage: This measure includes 297 items and constitutes 73.9% of the NCPI.
• Items excluded: Unprocessed food, energy, and utilities (except maize flour).

4. Non-Food Items

Significant price increases (October–November 2024):

• Charcoal: +1.5% (driven by seasonal demand and limited supply).
• Household appliances: +0.6% (due to exchange rate effects or supply constraints).
• Footwear for men: +0.6% (possibly reflecting higher input costs).
• Household furniture: +0.4%.
• Personal care products: +0.4%.

5. Energy, Fuel, and Utilities

• The Energy, Fuel, and Utilities Index recorded a 5.7% annual increase. This reflects higher global energy prices or adjustments in local tariffs.
  • Likely driven by costs in electricity, water, and fuels like kerosene.

6. Services, Goods, and Education Indices

• Services Index: Up 2.3% annually, reflecting modest price increases in service-related industries (transportation, healthcare, etc.).
• Goods Index: Increased by 3.3%, indicating general upward price movement for tangible products.
• Education Services: Saw a 3.1% annual increase, likely influenced by rising costs in tuition fees or related expenses.

Analysis of Inflation Trends

• Stability: A headline inflation rate of 3.0% over two months shows effective inflation management, reflecting balanced monetary and fiscal policies.
• Upward pressures: Food prices (e.g., maize, millet, fish, and groundnuts) and non-food categories like energy and charcoal have seen notable increases, which may impact households disproportionately depending on income levels.
• Core Inflation: Slight upward movement in core inflation indicates broader, consistent price increases in stable goods and services, a key indicator of underlying inflation trends.

Implications

• Households: Rising food and non-food prices may strain lower-income households, especially with the increase in essentials like maize and charcoal.
• Monetary Policy: The Bank of Tanzania's policies appear effective, maintaining inflation within the targeted range, but vigilance is needed due to creeping food inflation.
• Seasonal Variations: Some price increases (e.g., charcoal and maize) could be seasonal and might ease with improved supply or post-harvest periods.

The National Consumer Price Index (NCPI) report for November 2024 provides insights into the state of inflation in Tanzania and its potential implications for households, businesses, and policymakers.

1. Inflation Stability

• Headline inflation remaining stable at 3.0% shows that the cost of goods and services is rising at a moderate pace.
• This reflects effective monetary policies by the Bank of Tanzania, keeping inflation within a manageable range and fostering economic stability.

2. Food Price Pressures

• Food and Non-Alcoholic Beverages inflation increased from 2.5% in October to 3.3% in November 2024, driven by notable price hikes in staple foods like maize, millet, and cassava.
• This indicates seasonal pressures or supply chain challenges, which may be affecting the availability of key food items.
• With 28.2% weight in the NCPI, food inflation has a significant impact on overall inflation, especially for low-income households that spend a large portion of their income on food.

3. Rising Costs of Essentials

• The increase in core inflation to 3.3% signals price increases in non-volatile items such as household goods, footwear, and personal care products.
• These changes indicate broad price pressures that may not be temporary and could reflect rising production costs, import tariffs, or exchange rate fluctuations.

4. Energy and Utilities

• The 5.7% annual increase in the Energy, Fuel, and Utilities index highlights growing energy costs, which could affect transportation, manufacturing, and household budgets.
• Rising energy prices might be linked to global market trends or domestic adjustments in utility tariffs, potentially impacting businesses and consumers alike.

5. Broader Economic Trends

• The Services Index (+2.3%) and Goods Index (+3.3%) suggest that both tangible goods and services are experiencing moderate price increases.
• Education services inflation (+3.1%) could indicate rising school fees, a potential concern for households with school-going children.

Key Takeaways

1. For Households: Rising food and energy costs may place pressure on low-income families, especially as food and energy represent a significant share of their expenditures.
2. For Policymakers: The government and the Bank of Tanzania need to monitor food supply chains, energy prices, and exchange rate impacts to ensure inflation does not accelerate beyond the target range.
3. For Businesses: Companies may face higher input costs, particularly in energy and utilities, which could translate to higher product prices and impact consumer demand.
4. Economic Resilience: The stable overall inflation rate indicates that Tanzania's economic management is sound, but the upward movement in specific categories suggests the need for proactive measures to control price hikes in essential items.

Conclusion

While inflation in Tanzania is stable overall, the report highlights underlying pressures in food prices and energy costs. These pressures could have a ripple effect on household budgets and business operations if not managed effectively. Continuous monitoring and targeted interventions (e.g., supporting food production and reducing energy costs) will be critical to sustaining economic stability.

The Q3 2024 Index of Industrial Production (IIP) highlights a 5.5% quarterly growth in Tanzania's industrial sector, driven primarily by robust manufacturing performance. While sectors like beverages, tobacco, and non-metallic mineral products show significant expansion, traditional industries such as mining, textiles, and utilities face stagnation or decline. The findings emphasize the need for targeted support to lagging industries and strategies to sustain growth in high-performing sectors.

Overall Index Performance

• Quarter-over-quarter performance: The overall IIP rose from 104.9 in Q2 2024 to 110.6 in Q3 2024, a growth of 5.5%.
• Year-over-year performance: Compared to Q3 2023 (index: 107.1), the IIP grew by 3.3% in Q3 2024.

This indicates a steady recovery and growth trajectory in Tanzania's industrial production.

Manufacturing Sector

• Weight in total index: 58%
• Quarterly growth: The sector achieved 8.8% growth, with the index increasing from 107.5 in Q2 2024 to 117.0 in Q3 2024, making it the strongest-performing sector.
• Key contributors to growth:
  • Non-metallic mineral products: Increased by 20.9%, driven by construction and infrastructure projects.
  • Tobacco products: Increased by 18.7%, likely due to export demand and domestic market expansion.
  • Beverages: Increased by 18.0%, supported by seasonal demand and production efficiency.
• Declines within manufacturing:
  • Printing and media: Declined by -16.7%, reflecting reduced demand for printed materials.
  • Textiles: Declined by -15.5%, possibly due to competition from imports or high production costs.
  • Machinery repair/installation: Declined by -12.4%, suggesting reduced industrial investment or maintenance activities.

Other Major Sectors

Mining and Quarrying

• Weight in total index: 28.8%
• Quarter-over-quarter performance: Stagnant at 95.4.
• Year-over-year performance: Declined by -2.1%.
  This stagnation reflects challenges such as fluctuating global demand, operational issues, or regulatory constraints.

Electricity, Gas, Steam, and Air Conditioning

• Weight in total index: 11.7%
• Quarter-over-quarter performance: Modest growth of 1.5%.
• Year-over-year performance: Declined by -2.2%, suggesting lower demand or capacity challenges in the utilities sector.

Water Supply & Waste Management

• Weight in total index: 1.5%
• Quarter-over-quarter performance: Increased slightly by 1.1%.
• Year-over-year performance: Declined significantly by -7.3%, indicating issues in operational capacity or investment in the sector.

Year-over-Year Standout Performers

1. Rubber and plastic products: Grew by +24.4%, reflecting increased industrial and consumer use.
2. Beverages: Grew by +23.6%, supported by both domestic consumption and export.
3. Paper products: Grew by +23.1%, likely driven by demand from packaging and related industries.

Biggest Year-over-Year Declines

1. Textiles: Declined by -24.3%, showing continued struggles with competition, costs, or market access.
2. Printing and media: Declined by -15.7%, emphasizing a shift toward digital media consumption.
3. Basic metals: Declined by -12.3%, reflecting reduced industrial activity or exports in the sector.

Key Insights

• The manufacturing sector is the main driver of industrial growth, with strong contributions from beverages, tobacco, and non-metallic minerals.
• The performance across sectors remains uneven:
  • Growth is concentrated in consumer-oriented and export-driven industries.
  • Traditional industries such as mining, utilities, and textiles face stagnation or decline.
• The mixed performance underscores the need for targeted support for struggling sectors and policies to sustain momentum in high-performing ones.

The Index of Industrial Production (IIP) for Tanzania in Q3 2024 tells a story of sectoral disparity and shifting dynamics in the industrial economy.

1. Positive Overall Growth

• The 5.5% quarterly increase and 3.3% annual growth reflect overall recovery and resilience in Tanzania's industrial sector.
• This growth is primarily driven by the manufacturing sector, which is performing strongly.

2. Manufacturing is the Key Driver

• Manufacturing, with a significant 58% weight in the index, is leading growth due to:
  • Strong demand for construction materials (non-metallic minerals).
  • Increased production of beverages and tobacco products.
  • Rising export and local consumption in high-performing industries.
• Consumer-oriented industries like beverages and tobacco are thriving, suggesting domestic consumption and export markets are supporting growth.

3. Uneven Sectoral Performance

• Mining and Quarrying: Stagnation at 95.4 shows the sector is under pressure, potentially due to:
  • Volatility in global commodity prices.
  • Regulatory or operational hurdles.
• Utilities (electricity, gas, water): Marginal or negative performance indicates challenges in expanding capacity or meeting demand.

4. Year-over-Year Declines in Traditional Industries

• Textiles (-24.3%) and Printing (-15.7%) are facing structural issues, such as:
  • Competition from imports or substitutes.
  • Shifting consumer preferences, especially toward digital media.
• Basic metals (-12.3%) and machinery repair suggest weaker industrial investment, which may impact future capacity.

5. A Dynamic Shift in Industrial Focus

• The standout performers—rubber, plastic, beverages, and paper products—point to a shift towards diversified and consumer-driven industries.
• Declines in traditional manufacturing like textiles and metals suggest that the economy is moving away from labor-intensive, lower-value industries toward higher-value, diversified production.

6. Challenges to Address

• Stagnation in mining and utilities needs strategic interventions, such as:
  • Modernizing infrastructure.
  • Improving regulatory frameworks to attract investment.
• Struggling industries (e.g., textiles and printing) may require:
  • Support to boost competitiveness.
  • Diversification to align with global trends.

7. Strategic Implications

Tanzania's industrial sector is on a growth trajectory, its performance is uneven, driven by a few high-performing sub-sectors. To sustain this growth, Tanzania must:

• Capitalize on high-growth sectors like manufacturing, beverages, and construction materials.
• Revive lagging industries through policy support, investment, and innovation.
• Foster diversification to reduce dependency on a few key industries.

The Bank of Tanzania's financial position for November 2024 reflects a delicate balance between supporting fiscal needs and maintaining economic stability. Key changes include a 2.5% decline in total assets to TZS 25.39 trillion, driven by reduced cash reserves, alongside increased advances to the government by TZS 470 billion. These movements highlight fiscal pressures, external obligation management, and the central bank's critical role in stabilizing the economy amidst tightening financial conditions.

Bank of Tanzania's Statement of Financial Position as of November 30, 2024, with figures and key changes compared to October 2024:

1. Total Assets

• November 2024: TZS 25,388,447,414
• October 2024: TZS 26,040,992,974
• Change: Decreased by TZS 652,545,560 (approximately 2.5%).

This decline reflects changes in various asset components, most notably the sharp drop in cash and cash equivalents, offset partially by an increase in advances to the government.

2. Major Asset Components

a. Foreign Currency Marketable Securities

• Value: TZS 8,136,841,550
• Observation: This remains the largest asset on the Bank’s balance sheet, indicating the institution's significant reliance on foreign investments.

b. Cash and Cash Equivalents

• November 2024: TZS 4,879,028,404
• October 2024: TZS 6,028,657,113
• Change: Decreased by TZS 1,149,628,709 (~19.1%).

This sharp decline could signal increased liquidity outflows, possibly to meet operational obligations or support the financial system.

c. Advances to Government

• November 2024: TZS 5,394,166,906
• October 2024: TZS 4,924,120,304
• Change: Increased by TZS 470,046,602 (~9.5%).

The rise indicates higher support for government financing needs, which may align with fiscal demands or debt management objectives.

3. Total Liabilities

• November 2024: TZS 22,685,046,183
• October 2024: TZS 23,185,162,980
• Change: Decreased by TZS 500,116,797 (approximately 2.2%).

This reflects reductions in foreign currency financial liabilities, indicating a likely repayment or adjustment of external obligations.

4. Major Liability Components

a. Currency in Circulation

• November 2024: TZS 8,625,807,089
• October 2024: TZS 8,589,148,419
• Change: Increased by TZS 36,658,670 (~0.4%).

This small increase is consistent with seasonal factors or economic growth-related cash demand.

b. Foreign Currency Financial Liabilities

• November 2024: TZS 4,933,972,124
• October 2024: TZS 5,410,348,462
• Change: Decreased by TZS 476,376,338 (~8.8%).

This reduction suggests repayments or reduced foreign currency obligations, contributing to the overall liability decline.

c. Bank and Non-Bank Financial Institution Deposits

• Value: TZS 3,231,602,090
• Observation: These deposits remain a significant liability, reflecting funds entrusted by financial institutions to the Bank of Tanzania.

5. Equity Position

• Total Equity: TZS 2,703,401,231
• October 2024: TZS 2,855,829,994
• Change: Decreased by TZS 152,428,763 (~5.3%).

Breakdown:

• Paid-Up Capital: Unchanged at TZS 100,000,000.
• Reserves: Decreased from TZS 2,755,829,994 to TZS 2,603,401,231, reflecting lower retained earnings or adjustments to reserve accounts.

6. Notable Changes and Observations

1. Cash and Cash Equivalents:
   The TZS 1.15 trillion drop signals significant liquidity pressures or policy interventions.
2. Advances to Government:
   The TZS 470 billion rise indicates greater reliance on central bank funding for fiscal operations.
3. Currency in Circulation:
   A slight increase of TZS 36.7 billion aligns with consistent cash demand.
4. Foreign Currency Financial Liabilities:
   A reduction of TZS 476 billion highlights improved external balance management.

The November 2024 statement reveals efforts to balance liquidity support to the economy and reduce external obligations. While the decline in total assets and equity signals tightening financial conditions, the increase in advances to the government underscores the central bank's role in supporting fiscal policy.

The Bank of Tanzania's Statement of Financial Position for November 2024 with key insights about the central bank's financial health, economic priorities, and operational trends.

1. Liquidity Pressures and Operational Adjustments

• Sharp decline in Cash and Cash Equivalents (down TZS 1.15 trillion):
  This indicates liquidity outflows, possibly due to:
  • Interventions in the financial markets to stabilize the Tanzanian shilling.
  • Support to commercial banks or other financial institutions.
  • Seasonal outflows, such as government spending obligations (e.g., salary payments or infrastructure financing).

2. Increased Government Financing

• Advances to Government up by TZS 470 billion (9.5%):
  This suggests the government relied more heavily on the central bank for funding in November. Potential reasons include:
  • Budgetary shortfalls requiring deficit financing.
  • Delays in revenue collection or international financing.
  • Efforts to finance ongoing development projects or meet fiscal priorities.

3. Stable Domestic Economic Activity

• Currency in Circulation slightly increased (up TZS 36.7 billion):
  This minor growth suggests stable domestic demand for cash, possibly reflecting:
  • Economic activity proceeding without major shocks.
  • Seasonal increases in cash needs (e.g., for holiday spending).

4. Improved Management of External Obligations

• Foreign Currency Financial Liabilities decreased by TZS 476 billion (8.8%):
  This points to:
  • Successful repayment or refinancing of foreign liabilities.
  • A reduction in dependence on external financing, possibly due to improved forex inflows or lower external debt servicing.

5. Decline in Equity Reflects Tight Financial Conditions

• Equity reduced by 5.3% (TZS 152.4 billion):
  These decreases, primarily due to lower reserves, could mean:
  • Lower profits or unrealized losses from foreign currency marketable securities (e.g., due to forex volatility or interest rate changes).
  • The central bank might be absorbing shocks to stabilize the economy, at the cost of its reserve position.

6. Overall Economic Implications

1. Fiscal Dependence:
   The government’s increased reliance on central bank funding highlights fiscal pressures. This could signal challenges in meeting revenue targets or higher expenditure demands.
2. Monetary Tightening Signals:
   The reduction in liabilities and cash reserves indicates the central bank might be tightening liquidity to control inflation or stabilize the currency.
3. Economic Stability:
   Stable currency in circulation and reduced foreign liabilities suggest the central bank is managing to maintain economic stability despite challenges.

Key Concerns

• Shrinking Assets:
  A 2.5% decline in total assets reflects constrained central bank resources, which may limit its ability to respond to future shocks.
• Reliance on Domestic Borrowing:
  Increased advances to the government could crowd out private sector borrowing and hinder growth if sustained.

Conclusion

The statement shows a central bank balancing multiple priorities: supporting government financing, managing external liabilities, and maintaining domestic liquidity. However, shrinking reserves and declining assets may signal the need for tighter fiscal discipline and a cautious approach to monetary policy.

Msimamo wa kifedha wa Benki Kuu ya Tanzania kwa Novemba 2024 unaonyesha juhudi za taasisi hiyo kusawazisha kati ya msaada wa kifedha na uthabiti wa kiuchumi. Kupungua kwa mali jumla kwa 2.5%, hasa kutokana na kupungua kwa akiba ya fedha taslimu na ongezeko kubwa la mikopo kwa serikali, kunaonyesha majibu ya benki kuu dhidi ya changamoto za kiuchumi na kifedha zilizopo. Ifuatayo ni uchambuzi wa kina wa taarifa ya kifedha na takwimu muhimu.

1. Total Assets (Mali Jumla)

Novemba 2024: TZS 25,388,447,414
Oktoba 2024: TZS 26,040,992,974
Mabadiliko: Imepungua kwa TZS 652,545,560 (~2.5%)

Kupungua huku kunatokana na mabadiliko katika vipengele vya mali, hususan:

• Kupungua kwa kasi kwa fedha taslimu na sawa na taslimu.
• Ongezeko la mikopo kwa serikali.

2. Major Asset Components (Vipengele Vikuu vya Mali)

a. Hati za Nje Zinazoweza Kuuzwa Sokoni

• Thamani: TZS 8,136,841,550
• Uchambuzi: Hati hizi zinaendelea kuwa mali kubwa zaidi kwenye mizania ya Benki Kuu, ikisisitiza utegemezi wa uwekezaji wa nje.

b. Fedha Taslimu na Sawa na Taslimu

• Novemba 2024: TZS 4,879,028,404
• Oktoba 2024: TZS 6,028,657,113
• Mabadiliko: Imepungua kwa TZS 1,149,628,709 (~19.1%)

Kupungua huku kwa kiasi kikubwa kunaonyesha changamoto za ukwasi, zinazoweza kusababishwa na:

• Hatua za soko kuthibiti thamani ya shilingi ya Tanzania.
• Msaada kwa taasisi za kifedha.
• Matumizi ya msimu ya serikali, kama mishahara na miradi ya maendeleo.

c. Mikopo kwa Serikali

• Novemba 2024: TZS 5,394,166,906
• Oktoba 2024: TZS 4,924,120,304
• Mabadiliko: Imeongezeka kwa TZS 470,046,602 (~9.5%)

Ongezeko hili linaonyesha utegemezi mkubwa wa serikali kwa ufadhili wa benki kuu ili kufidia mapungufu ya bajeti, kusaidia miradi ya maendeleo, au kudhibiti madeni.

3. Jumla ya Madeni

Novemba 2024: TZS 22,685,046,183
Oktoba 2024: TZS 23,185,162,980
Mabadiliko: Imepungua kwa TZS 500,116,797 (~2.2%)

Kupungua huku kunatokana na kupungua kwa madeni ya kifedha ya sarafu za kigeni, ishara ya usimamizi bora wa wajibu wa nje.

4. Vipengele Vikuu vya Madeni

a. Fedha Katika Mzunguko

• Novemba 2024: TZS 8,625,807,089
• Oktoba 2024: TZS 8,589,148,419
• Mabadiliko: Imeongezeka kwa TZS 36,658,670 (~0.4%)

Ongezeko hili dogo linaonyesha mahitaji thabiti ya fedha ndani ya nchi, yakichochewa na sababu za msimu na shughuli za kiuchumi.

b. Madeni ya Kifedha ya Sarafu za Kigeni

• Novemba 2024: TZS 4,933,972,124
• Oktoba 2024: TZS 5,410,348,462
• Mabadiliko: Imepungua kwa TZS 476,376,338 (~8.8%)

Kupungua huku kunaonyesha:

• Malipo yaliyofanikiwa au urejeshwaji wa madeni ya nje.
• Kuongezeka kwa mapato ya fedha za kigeni au kupungua kwa gharama za huduma za madeni ya nje.

c. Amana za Mabenki na Taasisi Zisizo za Kibenki

• Thamani: TZS 3,231,602,090
• Uchambuzi: Amana hizi zinaendelea kuwa sehemu kubwa ya madeni, zikionyesha fedha zilizowekwa na taasisi za kifedha kwa Benki Kuu ya Tanzania.

5. Equity Position (Nafasi ya Hisa)

Novemba 2024: TZS 2,703,401,231
Oktoba 2024: TZS 2,855,829,994
Mabadiliko: Imepungua kwa TZS 152,428,763 (~5.3%)

Mgawanyo:

• Mtaji Ulioingizwa: TZS 100,000,000 (haujabadilika)
• Akiba: Imepungua kutoka TZS 2,755,829,994 hadi TZS 2,603,401,231, ikionyesha mapato madogo yaliyobaki au hasara ambazo hazijagunduliwa.

6. Notable Trends and Observations

a. Changamoto za Ukwasi:
Kupungua kwa TZS 1.15 trilioni katika fedha taslimu kunaonyesha changamoto kubwa za ukwasi, labda kutokana na hatua za sera au mahitaji ya kifedha.

b. Utegemezi wa Kifedha:
Ongezeko la TZS 470 bilioni la mikopo kwa serikali linaonyesha shinikizo za bajeti na utegemezi wa serikali kwa ufadhili wa benki kuu.

c. Shughuli Thabiti za Ndani:
Ongezeko dogo la fedha katika mzunguko linaonyesha mahitaji thabiti ya fedha kwa shughuli za kiuchumi zinazoendelea.

d. Usimamizi wa Madeni ya Nje:
Kupungua kwa TZS 476 bilioni kwa madeni ya sarafu za kigeni kunaonyesha usimamizi bora wa madeni ya nje, kupunguza utegemezi kwa ufadhili wa nje.

e. Changamoto za Hisa:
Kupungua kwa asilimia 5.3 ya hisa kunaonyesha hali ngumu ya kifedha, labda kutokana na faida ndogo au marekebisho ya akiba ili kuhimili changamoto za kiuchumi.

Hitimisho

Taarifa ya kifedha ya Novemba 2024 inaonyesha Benki Kuu ikijaribu kusawazisha vipaumbele vingi: kusaidia shughuli za serikali, kudumisha ukwasi, na kusimamia wajibu wa nje. Licha ya kupungua kwa mali jumla na hisa, hatua za benki kuu zinaonyesha dhamira ya kudumisha uthabiti wa uchumi na kushughulikia changamoto za kifedha.

In October 2024, Zanzibar's economy demonstrated resilience, showing strong fiscal performance, improved external trade, and effective management of inflationary pressures. While inflation rose moderately, the government exceeded revenue targets, and external sector performance strengthened with an increasing current account surplus and robust exports. Despite some challenges, Zanzibar's economy remains on a positive trajectory, with strategic fiscal management and growing export potential.

1. Inflation Analysis

In October 2024, Zanzibar's inflation showed an upward trend in comparison to the previous month but remained lower than the same period in 2023.

• Headline Inflation:
  • 5.8% (up from 4.8% in September 2024)
  • Lower than 6.5% in October 2023.
• Inflation Components:
  • Non-food Inflation:
    • 4.1% (up from 2.8% in September).
    • The increase is mainly driven by rising kerosene and petrol prices.
  • Food Inflation:
    • 8.2% (up from 7.3% in September).
    • Key contributors:
      • Fish: Rising demand and supply constraints.
      • Jasmine Rice: Price increases linked to global supply and domestic production challenges.
      • Edible Cooking Oil: Price hikes caused by supply chain disruptions.
  • Month-to-Month Inflation:
    • 0.1% (compared to -0.9% in October 2023), indicating slight price increases in the short term.

2. Government Budgetary Operations

The government’s budget performance in October 2024 reflected strong revenue generation, but also substantial expenditure.

• Total Revenue and Grants:
  • TZS 158.3 billion (domestic revenue: TZS 143.2 billion, exceeding the target by 1.9%).
• Tax Revenue:
  • Total Tax Revenue:
    • TZS 129.3 billion (exceeded target by 4.8%).
  • Key Components:
    • Tax on Imports: TZS 25.9 billion.
    • VAT and Excise Duties: TZS 44.7 billion.
    • Income Tax: TZS 27.4 billion.
    • Other Taxes: TZS 31.4 billion.
• Non-Tax Revenue:
  • TZS 13.9 billion (81.3% of the target).
• Government Expenditure:
  • Total Expenditure: TZS 283.1 billion.
    • Recurrent Expenditure: TZS 163.5 billion.
    • Development Expenditure: TZS 119.6 billion.
      • Local Financing: TZS 68.1 billion.
      • Foreign Resources: The remaining balance.

3. External Sector Performance

Zanzibar’s external sector exhibited a positive trend, with an increase in the current account surplus and stronger export performance.

• Current Account:
  • The current account remained in surplus.
  • It increased to USD 520.4 million (up from USD 335.8 million), showing stronger economic health.
• Exports:
  • Total Goods and Services:
    • USD 1,077.3 million (up from USD 972.1 million), driven by various sectors, particularly tourism.
  • Cloves Exports:
    • USD 22.1 million (declined by 18.6% due to cyclical nature of production).
  • Monthly Exports (October 2024):
    • USD 110.1 million (up from USD 84.4 million).
• Imports:
  • Total Imports:
    • Declined by 11.3% to USD 575.4 million.
  • Capital Goods:
    • Decreased to USD 51 million (from USD 79.6 million), possibly due to reduced infrastructure and machinery purchases.
  • Monthly Imports (October 2024):
    • USD 70.6 million.

4. Key Economic Indicators

• Revenue Performance: Strong revenue generation, particularly from taxes.
• Expenditure Management: The government efficiently managed its recurrent and development expenditures.
• External Sector Performance: Improving trade balance with a positive current account surplus and increasing exports.
• Inflation Pressures: Moderate inflation driven by food and fuel prices, manageable within the overall context.
• Fiscal Balance: Zanzibar has balanced fiscal operations with strong revenue and controlled expenditures.

Overall Economic Performance

• Fiscal Management:
  Improved fiscal management, with the government meeting and exceeding its revenue targets and allocating strategic resources.
• External Position:
  Strong external sector performance, with a positive current account surplus and improving export performance. However, imports have declined, particularly in capital goods.
• Inflation Management:
  Inflation remains at a manageable level, with moderate pressures mainly from food prices and energy costs.
• Revenue and Expenditure:
  Effective revenue collection and strategic expenditure allocation, supporting both recurrent and development needs.
• Tourism and Export Growth:
  The tourism sector continues to be a major contributor, with export growth in goods and services.
• Declining Import Dependency:
  The decline in imports, especially capital goods, suggests a shift towards local production or more efficient use of foreign resources.

In summary, Zanzibar's economy shows resilience with improving fiscal and external sector performance, despite facing some inflationary pressures. The strong performance in revenue collection and controlled expenditure management indicates a solid foundation for continued economic growth.

Zanzibar's economic performance in October 2024 with key insights:

1. Moderate Inflation Pressures:
   Inflation has risen, but the overall increase is moderate (5.8% in October 2024 compared to 4.8% in September). The rise in food inflation, driven by increased prices of fish, rice, and cooking oil, and the rise in non-food inflation due to higher kerosene and petrol prices, indicate inflationary pressures. However, the month-to-month inflation rate is positive at 0.1%, suggesting that the inflation increase is gradual and not an immediate crisis.
2. Strong Revenue Performance:
   Zanzibar has exceeded its revenue targets, with tax revenue surpassing expectations by 4.8%. Key contributors to this performance include taxes on imports, VAT and excise duties, and income taxes. This indicates a robust tax collection system and strong economic activity, which is helping to support the government’s fiscal health.
3. Effective Expenditure Management:
   Despite the strong revenue performance, the government has managed its expenditures well. The government’s total expenditure is substantial at TZS 283.1 billion, but it is well-managed, with clear allocations for recurrent spending and development projects. Local financing of development expenditure is notably high, suggesting efforts to support projects without overly relying on foreign loans.
4. Improving External Sector:
   Zanzibar's external sector has improved, with the current account surplus increasing significantly (from USD 335.8 million to USD 520.4 million). The growth in exports, particularly in goods and services (from USD 972.1 million to USD 1,077.3 million), shows that Zanzibar is improving its trade balance and increasing its foreign earnings. The decline in imports, particularly in capital goods, could suggest a reduction in dependency on foreign goods, which is a positive sign of local production capacity or shifting priorities.
5. Resilient Economic Position:
   Overall, Zanzibar’s economy demonstrates resilience. Despite inflationary pressures, it is maintaining strong fiscal performance, with effective revenue collection, strategic expenditure allocation, and a positive external position. The tourism sector continues to be a strong driver of exports, contributing to overall economic growth.
6. Declining Import Dependency:
   A decrease in imports, especially capital goods, might indicate a move toward local production or more efficient utilization of foreign resources, which would reduce dependency on foreign imports in the long term.

Key Takeaways:

• Zanzibar's economy is on a positive trajectory with improving fiscal health, growing external reserves, and effective management of inflation.
• The revenue performance is strong, and the government's expenditure is well-targeted, with an emphasis on sustainable development and local financing.
• External trade is improving, with a stronger export performance and a current account surplus, though the import decline indicates a shift toward reducing dependency on foreign goods.
• Inflation, although moderate, poses some risks, primarily from food and fuel prices, which will need to be managed carefully.

Overall, Zanzibar's economy is stable and growing, with effective fiscal policies and an improving external sector, though managing inflation and ensuring sustainable import-export balances will be key to continued prosperity.

In 2024, Tanzania’s external sector demonstrated significant improvement, marked by a narrowing of the current account deficit, strong export performance, and a robust recovery in tourism. Key drivers such as higher gold exports and increased tourist arrivals contributed to the positive outlook, while controlled import growth and adequate foreign exchange reserves ensured external stability. These developments reflect effective economic management, positioning Tanzania for continued resilience and growth in the global market.

1. Current Account

• Deficit Narrowing: The current account deficit for the year ending October 2024 narrowed to USD 2,212.3 million, compared to USD 3,281.9 million for the year ending October 2023. This marks an improvement of USD 1,069.6 million or a 32.6% reduction in the deficit.
• Improvement Drivers: The reduction in the current account deficit is attributed to:
  • Export growth: A substantial increase in exports.
  • Favorable commodity prices: Particularly in gold and other key exports like tobacco, coffee, and cashew nuts.

2. Exports Performance

• Total Exports: Tanzania's total exports reached USD 15,497.8 million, reflecting a 12.9% increase compared to the previous year.

Traditional Exports:

• These grew from USD 910.2 million to USD 1,148.3 million, driven primarily by:
  • Tobacco
  • Coffee
  • Cashew nuts

Non-traditional Exports:

• Increased from USD 6,352.9 million to USD 6,922.7 million. Breakdown:
  • Gold: 47.8% of non-traditional exports, a major contributor to the export increase.
  • Horticultural Products: USD 496.2 million (up from USD 414.6 million).
  • Manufactured Goods: USD 1,315.0 million, contributing to the non-traditional export growth.

3. Services Receipts

• Total receipts from services grew to USD 6,950.6 million, up from USD 6,041.5 million. Key components:
  • Travel (Tourism): USD 3,676.1 million (19.7% increase), with tourist arrivals totaling 2,095,919.
  • Transport Earnings: USD 2,693.6 million, up from USD 2,340.8 million, indicating strong performance in logistics and shipping services.

4. Imports Performance

• Total Imports: USD 16,485.8 million, a 2.3% increase compared to the previous year.
• Key categories contributing to the import growth:
  • Iron and steel
  • Sugar for industrial use
  • Plastic items
  • Footwear
• Monthly Imports (October 2024):
  • Goods: USD 1,257.6 million
  • Services: USD 236.9 million

5. Foreign Exchange Reserves

• Reserves: USD 5,417.74 million, sufficient to cover 4.4 months of projected imports, exceeding the national benchmark of 4 months.
• This indicates a solid foreign exchange buffer, helping to manage import payments and external shocks.

6. Primary Income Account

• Deficit: The primary income account deficit widened to USD 1,777.8 million, compared to USD 1,542.4 million in the previous year. The deterioration was primarily due to:
  • Increased interest payments abroad, which have added pressure on the income balance.

7. Secondary Income Account

• Surplus: The surplus declined to USD 553.4 million from USD 641.5 million, with the surplus for October 2024 standing at USD 44.8 million. This is a decrease in the secondary income inflows, likely due to a reduction in remittances or other transfers.

8. World Commodity Prices (October 2024)

• Crude Oil: USD 74 per barrel, up from USD 72.4, influencing the import costs, particularly for petroleum-related goods.
• Gold: Prices continued to rise, benefiting Tanzania’s export revenue, especially from gold.
• Coffee, Tea, and Rice: Prices showed mixed trends, which likely had varied effects on Tanzania's agricultural export performance.

Key Observations:

1. Strong Export Performance: Both traditional (tobacco, coffee, cashew nuts) and non-traditional exports (especially gold) performed well, supporting Tanzania’s export growth.
2. Tourism Recovery: The tourism sector has shown a robust recovery, with a 19.7% increase in receipts, driven by a rise in tourist arrivals.
3. Import Growth Moderation: Despite a rise in imports, the growth rate has moderated to 2.3%, indicating controlled import spending.
4. Adequate Foreign Exchange Reserves: Reserves at USD 5,417.74 million are strong enough to cover 4.4 months of imports, supporting external stability.
5. Improved Trade Balance: The narrowing of the current account deficit and strong export growth indicate a better trade balance.
6. Robust Service Sector: The service sector, particularly tourism and transport, has performed well, contributing significantly to foreign exchange earnings.

Conclusion:

Tanzania’s external sector performance in 2024 shows:

• Improved trade balance, driven by strong export growth and controlled imports.
• Resilient tourism sector, contributing to increased services receipts.
• Strong foreign exchange reserves provide an adequate buffer for economic stability.
• Improved external position indicates effective economic management and resilience in the face of external shocks.

The analysis of Tanzania’s external sector performance in 2024 with positive trends and key insights about the country’s economic position:

1. Improved Economic Stability:
   • The narrowing of the current account deficit from USD 3.28 billion to USD 2.21 billion indicates a stronger balance of payments. This improvement suggests better economic management, with exports growing and imports being controlled, contributing to a healthier external position.
2. Strong Export Growth:
   • Total exports increased by 12.9%, with both traditional and non-traditional exports performing well. The growth in gold exports (nearly 48% of non-traditional exports), tobacco, coffee, and horticultural products shows that Tanzania is maintaining its competitiveness in key global markets.
3. Resilient Tourism Sector:
   • The tourism sector's recovery is evident in the 19.7% increase in tourism receipts, driven by more tourist arrivals (2,095,919). This sector is a key contributor to foreign exchange earnings and overall economic resilience, signaling a strong recovery from the challenges posed by global disruptions (such as the COVID-19 pandemic).
4. Moderate Import Growth:
   • While imports increased by 2.3%, the controlled growth reflects a balanced approach to foreign spending, suggesting that Tanzania is managing its consumption of foreign goods effectively. The moderation in import growth also helps in narrowing the trade deficit.
5. Adequate Foreign Exchange Reserves:
   • Tanzania's foreign exchange reserves of USD 5.42 billion, covering 4.4 months of imports, are sufficient to support external payments and protect against shocks. The reserves exceeding the national benchmark of 4 months demonstrate the country’s financial resilience.
6. Challenges in Primary Income and Secondary Income Accounts:
   • The primary income deficit has widened due to increased interest payments abroad, which reflects the costs associated with foreign debt or external financing. The secondary income surplus has decreased, which could indicate lower remittance flows or a drop in other transfers.
7. Commodity Price Trends:
   • The rise in gold prices and slight increase in crude oil prices are favorable for Tanzania’s export revenue (especially gold), while the increase in oil prices may lead to higher import costs, especially for petroleum-related goods.

Overall Implications:

• Strengthened External Position: The narrowing current account deficit, strong export performance, and adequate foreign exchange reserves indicate that Tanzania's external sector is strengthening.
• Economic Resilience: Despite global challenges, Tanzania’s economy shows resilience through growth in exports (especially gold) and services (tourism and transport).
• Effective Economic Management: The performance reflects the government’s effective management of external relations, particularly with controlling imports and maintaining stable foreign reserves.
• Opportunities for Growth: The strong export and tourism performances offer significant opportunities for further growth in these sectors, contributing to Tanzania's broader economic development.

In summary, Tanzania’s external sector is performing well, with stronger exports, a resilient tourism sector, moderate import growth, and adequate reserves. However, challenges remain, particularly regarding increased foreign debt payments.