Boosting Exports, Tourism, and Foreign Investment Amidst Growing Imports

The external sector performance in Tanzania reflects the country's interactions with the global economy through trade, foreign direct investments, and other international economic activities. Here are the key details based on the document:

Trade Performance

• Exports and Imports:
  • Total Exports: The value of exports of goods and services in May 2024 was USD 11,020.2 million, an increase from USD 10,419.8 million in May 2023. This growth is driven by higher receipts from tourism and non-traditional exports.
  • Total Imports: The value of imports of goods and services in May 2024 stood at USD 14,152.7 million, slightly up from USD 13,849.5 million in May 2023. The increase is largely attributed to higher imports of intermediate and consumer goods.

Balance of Payments

• Current Account Deficit: The current account deficit widened to USD 3,132.5 million in May 2024 from USD 2,963.7 million in May 2023. The widening deficit is primarily due to a higher increase in imports relative to exports.
  • Exports of Goods: USD 6,742.8 million in May 2024, compared to USD 6,205.1 million in May 2023.
  • Imports of Goods: USD 10,215.8 million in May 2024, compared to USD 9,771.2 million in May 2023.

Tourism Receipts

• Tourism: Receipts from tourism, a major foreign exchange earner, increased to USD 3,051.5 million in May 2024 from USD 2,853.4 million in May 2023. This growth is attributed to an increase in the number of tourist arrivals and higher average spending per tourist.

Foreign Exchange Reserves

• Foreign Reserves: The Bank of Tanzania maintained foreign exchange reserves equivalent to about 4.5 months of import cover, which is above the country's benchmark of 4 months. This level of reserves is crucial for ensuring stability in the exchange rate and for covering import needs.

Exchange Rate

• Shilling Exchange Rate: The Tanzania shilling depreciated by 11.6 percent against the US dollar over the year, trading at an average of TZS 2,599.05 per US dollar in May 2024 compared to TZS 2,584.69 per US dollar in the preceding month.

Foreign Direct Investment (FDI)

• FDI Inflows: The country continued to attract foreign direct investments, particularly in mining, manufacturing, and tourism sectors, contributing positively to the external sector performance and economic growth.

Hence, The external sector performance highlights Tanzania's active engagement in international trade, with notable increases in both exports and imports. The growth in tourism receipts and foreign direct investments indicates a positive outlook for the country’s foreign exchange earnings. The current account deficit, while widening, is managed with adequate foreign exchange reserves. The depreciation of the shilling, however, poses challenges but is mitigated by the reserves maintained by the Bank of Tanzania.

The external sector performance reflects a dynamic and growing Tanzania economy

The external sector performance reflects a dynamic and growing Tanzania economy with increasing engagement in global trade. The positive trends in exports and tourism, coupled with sustained FDI inflows, demonstrate robust economic activity and growth potential. However, the widening current account deficit and shilling depreciation highlight the need for balanced policies to support export growth, manage import levels, and maintain currency stability.

1. Growth in Exports and Imports

• Exports Increase: The growth in total exports to USD 11,020.2 million in May 2024 from USD 10,419.8 million in May 2023 indicates a positive trend in the country's export capacity. This growth, driven by tourism and non-traditional exports, reflects Tanzania's ability to diversify its export base and enhance its foreign exchange earnings.
• Imports Increase: The rise in imports to USD 14,152.7 million from USD 13,849.5 million indicates robust domestic demand, likely fueled by economic activities and development projects requiring intermediate and consumer goods. While this contributes to a trade deficit, it also suggests an expanding economy that is investing in growth.

2. Current Account Deficit

• Widening Deficit: The increase in the current account deficit to USD 3,132.5 million from USD 2,963.7 million suggests that the country is importing more than it exports. While this can be a sign of robust domestic consumption and investment, it also highlights the need to further enhance export performance and reduce dependency on imports.

3. Tourism Sector Performance

• Tourism Receipts: The significant increase in tourism receipts to USD 3,051.5 million indicates a thriving tourism sector. This growth supports economic development by generating foreign exchange, creating jobs, and stimulating related industries such as hospitality, transportation, and retail.

4. Foreign Exchange Reserves

• Adequate Reserves: Maintaining foreign exchange reserves equivalent to 4.5 months of import cover shows prudent fiscal management. These reserves provide a buffer against external shocks, support the stability of the Tanzania shilling, and ensure the country can meet its international obligations.

5. Exchange Rate Dynamics

• Shilling Depreciation: The 11.6 percent depreciation of the Tanzania shilling against the US dollar indicates some pressure on the currency, possibly from higher import demand or external economic factors. While depreciation can make exports more competitive, it also makes imports more expensive, affecting inflation and purchasing power.

6. Foreign Direct Investment (FDI)

• FDI Inflows: Continued attraction of FDI, particularly in key sectors like mining, manufacturing, and tourism, highlights investor confidence in Tanzania's economic prospects. FDI brings in capital, technology, and expertise, contributing to economic growth and development.

Hence, Tanzania is on a positive development trajectory, leveraging its export and tourism sectors while managing external economic challenges through prudent fiscal and monetary policies. Continued focus on enhancing export capacity, attracting FDI, and maintaining adequate foreign exchange reserves will be crucial for sustaining this growth and ensuring long-term economic stability.

Government Budgetary Operations and Fiscal Management

Tanzania is focusing on improving revenue collection efficiency, managing expenditures prudently, and prioritizing development projects to foster sustainable economic growth. The budgetary operations reflect a commitment to fiscal stability and economic development.

Revenue Collection:

• Domestic Revenue: In April 2024, Tanzania's domestic revenue, which includes central and local government collections, was TZS 2,119 billion. This was 94.1 percent of the target for the month, demonstrating strong performance in revenue collection.
• Central Government Revenue: TZS 2,036.1 billion, with TZS 1,821.6 billion from tax revenue and TZS 214.6 billion from non-tax revenue.

Tax Categories Performance:

• Taxes on Imports: TZS 592.9 billion in 2024, compared to TZS 416.5 billion in 2023.
• Income Tax: TZS 384.5 billion in 2024, compared to TZS 258.4 billion in 2023.
• Taxes on Local Goods and Services: TZS 732.1 billion in 2024, compared to TZS 467.1 billion in 2023.
• Other Taxes: TZS 411.9 billion in 2024, compared to TZS 126.9 billion in 2023.
• Non-Tax Revenue: TZS 214.6 billion in 2024, compared to TZS 116.5 billion in 2023.

Government Expenditure:

• Total Expenditure: In April 2024, government expenditure amounted to TZS 2,480.4 billion, allocated as follows:
  • Recurrent Expenditure: TZS 1,882.8 billion, including wages and salaries, interest costs, and other recurrent expenditures.
  • Development Expenditure: TZS 597.5 billion, directed towards development projects.

Breakdown of Central Government Expenditure:

• Wages and Salaries: TZS 752.3 billion in 2024 estimates, compared to TZS 575.0 billion in 2023 actuals.
• Interest Costs: TZS 317.1 billion in 2024 estimates, compared to TZS 258.4 billion in 2023 actuals.
• Other Recurrent Expenditure: TZS 573.2 billion in 2024 estimates, compared to TZS 467.1 billion in 2023 actuals.
• Development Expenditure: TZS 597.5 billion in 2024, compared to TZS 126.9 billion in 2023 actuals.

Fiscal Management:

• 2024/25 National Budget Proposal: The budget estimate is TZS 49.35 trillion, an 11.2 percent increase from the previous year.
  • Revenue Estimates: Domestic revenue is projected to be 70.1 percent of the budget, focusing on improving compliance and leveraging ICT for efficiency.
  • Expenditure Allocation: Development expenditure is expected to account for 30 percent of the budget, prioritizing flagship projects outlined in the Five-Year Development Plan III.

Summary of Budget Frame for 2023/24 and 2024/25:

• Total Resources:
  • 2023/24: TZS 43,510,082 million
  • 2024/25: TZS 49,345,688 million
• Domestic Revenue:
  • 2023/24: TZS 30,503,207 million
  • 2024/25: TZS 34,610,646 million
• Grants:
  • 2023/24: TZS 5,466,215 million
  • 2024/25: TZS 5,130,613 million
• Loans:
  • 2023/24: TZS 7,540,841 million
  • 2024/25: TZS 9,604,428 million
• Total Expenditure:
  • 2023/24: TZS 43,510,082 million
  • 2024/25: TZS 49,345,688 million
• Recurrent Expenditure:
  • 2023/24: TZS 30,178,271 million
  • 2024/25: TZS 34,590,391 million
  • Debt Service:
    • 2023/24: TZS 10,469,759 million
    • 2024/25: TZS 13,121,466 million
  • Wages and Salaries:
    • 2023/24: TZS 10,882,126 million
    • 2024/25: TZS 11,767,987 million
• Development Expenditure:
  • 2023/24: TZS 13,331,811 million
  • 2024/25: TZS 14,755,296 million

Key Fiscal Assumptions:

• Real GDP Growth: Projected at 5.4 percent in 2024.
• Inflation: Targeted within a range of 3 to 5 percent.
• Revenue to GDP: Domestic revenue at 15.8 percent and tax revenue at 12.9 percent of GDP.
• Budget Deficit: Maintained at 3 percent of GDP.
• Foreign Exchange Reserves: Maintaining reserves to cover 4 months of imports.

Tanzania's Interest Rates

Lower Borrowing Costs and Higher Savings Returns Amidst Narrowing Spreads

The trends in Tanzania's banking sector, showing a more favourable environment for both borrowers and savers. The reduction in loan interest rates can drive economic activity, while the higher deposit rates can increase the savings rate, contributing to overall economic stability and growth.

Interest Rates on Loans:

• Overall Lending Rate: Decreased to an average of 15.23 percent in May 2024 from 15.42 percent in April 2024.
• Negotiated Lending Rate: Dropped to an average of 12.68 percent in May 2024 from 13.95 percent in the previous month. This rate reflects the interest charged on loans negotiated between banks and their customers, often for large or corporate clients.

Interest Rates on Deposits:

• Overall Deposit Rate: Increased to an average of 8.05 percent in May 2024 from 7.44 percent in April 2024. This rate indicates the return that savers earn on their deposits.

Interest Spread:

• One-Year Lending vs. Deposit Rates: The interest spread, which is the difference between the average lending rate and the deposit rate for one-year terms, narrowed to 6.83 percentage points in May 2024 from 7.72 percentage points in April 2024. This narrowing spread suggests that the cost of borrowing is becoming more favorable, and the returns on savings are improving.

Implications

• Easing Borrowing Costs: The decrease in lending rates indicates that borrowing has become more affordable for businesses and individuals, which can stimulate economic activity by encouraging investment and consumption.
• Increased Savings Returns: The increase in deposit rates offers better returns to savers, which can incentivize savings and enhance the capital available for lending.
• Narrowing Spread: A narrowing interest spread typically signals a competitive banking environment where the cost of borrowing is reduced, and savings are adequately rewarded. This balance supports financial stability and economic growth by facilitating access to credit while encouraging savings.

Summary Table:

The Insurance Sector in Tanzania

Performance Overview:

• Net Worth: The insurance sector's total net worth increased from TZS 690.5 billion in 2022 to TZS 742.2 billion in 2023, showing a growth of 7.5%.
• Investments: Total investments in the insurance sector rose by 12.7%, from TZS 1,169.7 billion to TZS 1,318.5 billion. This growth indicates stronger financial positions as assets outgrew liabilities.
• Gross Premiums Written: The total gross premiums written, combining general and life insurance, increased by 8.9% to TZS 1,238.5 billion. Specifically, premiums for general insurance increased by 8.8% to TZS 974.0 billion, and for life insurance, they grew by 9.2% to TZS 264.5 billion​​.

Market Dynamics:

• Digital Platforms and Bancassurance: The growth in the insurance sector was significantly driven by the use of digital insurance platforms and bancassurance. These innovations introduced new products, business channels, and expanded outreach, especially to rural areas. Consequently, motor insurance premiums rose from TZS 287.2 million to TZS 339.8 million, increasing its market share from 32.1% to 34.9%​​.

Financial Soundness Indicators:

• Retention Ratio: The retention ratio for general insurance increased to 53.3% from 49.4% in 2022, while life insurance retained 83.3%, down slightly from 85.7% in 2022. These ratios are within the regulatory thresholds, indicating balanced risk exposure and market stability.
• Liquidity Ratio: In 2023, the liquidity ratio for general insurers improved to 140.4% from 106.8% in 2022. For life insurers, it improved to 90.0% from 79.9% in the previous year​​.

Regulatory Developments:

• Guidelines Issued: The Tanzania Insurance Regulatory Authority (TIRA) introduced several guidelines in 2023 to enhance industry practices and consumer protection. These included guidelines on retention and reinsurance management, accreditation of automobile repairers, and medical insurance and health service provider registration​.

Growth and Resilience:

• The insurance subsector demonstrated robust growth and resilience. Total assets increased by 12.1% to TZS 1,870.8 billion by the end of 2023, while total liabilities rose by 10.2% to TZS 1,128.7 billion, indicating an increase in financial obligations due to higher policy payouts​​.

Insights on Tanzania's Economic Development from the Insurance Sector

The performance and trends in Tanzania's insurance sector provide several important insights into the broader economic development of the country:

1. Growth and Financial Stability

• Increased Net Worth and Investments: The insurance sector's net worth and total investments grew significantly, indicating a strengthening financial position. This growth reflects an increase in economic activities and confidence in the financial system.
  • Net Worth Growth: From TZS 690.5 billion in 2022 to TZS 742.2 billion in 2023 (7.5% growth).
  • Investment Growth: From TZS 1,169.7 billion to TZS 1,318.5 billion (12.7% growth).

2. Expanding Market and Accessibility

• Rising Gross Premiums: The increase in gross premiums written signifies a growing market for insurance products, driven by higher economic activity and improved public awareness.
  • Total Gross Premiums: Increased by 8.9% to TZS 1,238.5 billion.
  • General Insurance Premiums: Grew by 8.8% to TZS 974.0 billion.
  • Life Insurance Premiums: Grew by 9.2% to TZS 264.5 billion.
• Digital Platforms and Bancassurance: The adoption of digital platforms and bancassurance expanded insurance outreach, particularly in rural areas, enhancing financial inclusion and accessibility to insurance services.
• Motor Insurance Premiums: Increased from TZS 287.2 million to TZS 339.8 million, boosting its market share from 32.1% to 34.9%.

3. Financial Soundness and Risk Management

• Improved Retention and Liquidity Ratios: Better retention and liquidity ratios for insurers indicate prudent risk management and financial health.
  • General Insurance Retention Ratio: Improved to 53.3% from 49.4%.
  • Life Insurance Retention Ratio: Maintained at 83.3%, slightly down from 85.7%.
  • General Insurance Liquidity Ratio: Improved to 140.4% from 106.8%.
  • Life Insurance Liquidity Ratio: Improved to 90.0% from 79.9%.

4. Regulatory Enhancements

• New Guidelines: The Tanzania Insurance Regulatory Authority (TIRA) introduced guidelines to improve industry practices and consumer protection, fostering a stable and transparent insurance market.
  • Guidelines on retention and reinsurance management, accreditation of automobile repairers, and registration of medical insurance and health service providers were introduced.

5. Economic Resilience

• Growth in Assets and Liabilities: The increase in total assets and liabilities of the insurance sector reflects economic resilience and the capacity to handle higher policy payouts.
  • Total Assets: Increased by 12.1% to TZS 1,870.8 billion.
  • Total Liabilities: Rose by 10.2% to TZS 1,128.7 billion.

Implications for Economic Development

• Financial Inclusion: The expansion of digital insurance platforms and bancassurance has increased accessibility to insurance products, particularly in rural areas, contributing to financial inclusion.
• Economic Confidence: The growth in the insurance sector suggests rising economic confidence among businesses and individuals, which is crucial for sustained economic growth.
• Risk Mitigation: A robust insurance sector supports economic development by providing risk mitigation mechanisms for businesses and individuals, encouraging investment and economic activities.
• Regulatory Strength: The proactive regulatory environment ensures the stability and integrity of the insurance sector, fostering a secure financial ecosystem.

The growth and development of Tanzania's insurance sector indicate positive economic development, characterized by increased financial stability, expanding market accessibility, improved risk management, and a supportive regulatory framework.

The capital market in Tanzania.

1. Total Investment:
   • Increased by 9.3% to TZS 37,410.1 billion by the end of 2023, from TZS 33,998.4 billion in the previous year.
2. Trading Activities:
   • Equity and bond market trading activities rose by 31.4%, reaching TZS 4,154.6 billion by the end of 2023.
3. Collective Investment Schemes:
   • Net Asset Value (NAV) increased by 50.2%, reaching TZS 1,841.7 billion from TZS 1,226.3 billion in the previous year.
4. Equity Market:
   • Total equity turnover at the Dar es Salaam Stock Exchange (DSE) increased by 68.5% to TZS 255.2 billion from TZS 133.7 billion the previous year.
   • Growth driven by significant transactions, including the acquisition of 68.3% of shareholding in Tanga Cement Plc by Scancem International.
5. Market Capitalisation:
   • The equity market's depth, as measured by the ratio of total market capitalization to GDP, decreased to 9.8% from 11.9% in the preceding year.
6. Foreign Participation:
   • Foreign investor participation was significant, with local investors accounting for 42.7% on the buy side and 30.8% on the sell side.
7. Primary Market:
   • Government securities depicted discounted prices, increasing yields for investors.
   • Bond auctions were on average undersubscribed by 9.0% in 2023 compared to an oversubscription of 27.0% in the previous year.
   • Weighted average yield to maturity increased across all maturities.

The growth and resilience of the capital market are critical for Tanzania's economic development. Increased investment and trading activities indicate a robust financial environment conducive to economic growth. The significant rise in equity turnover and NAV of investment schemes highlights growing investor confidence and a conducive regulatory environment. The substantial foreign investor participation reflects Tanzania's improving attractiveness as an investment destination, which can further stimulate economic activities and development.

Insights on Tanzania's Economic Development from the Capital Market

The performance and trends in Tanzania's capital market provide valuable insights into the broader economic development of the country:

1. Investment Growth

• Total Investment Increase: The capital market saw a significant increase in total investment by 9.3% to TZS 37,410.1 billion by the end of 2023, compared to TZS 33,998.4 billion in the previous year. This growth indicates a strong flow of capital into the market, which is essential for funding economic activities and projects.

2. Increased Trading Activities

• Rising Trading Volumes: The increase in trading activities by 31.4% to TZS 4,154.6 billion signifies a more active and liquid market. Higher trading volumes reflect investor confidence and provide businesses with better access to capital for expansion and development.

3. Collective Investment Schemes

• NAV Growth: The substantial growth in the Net Asset Value (NAV) of collective investment schemes by 50.2%, reaching TZS 1,841.7 billion, highlights an increasing interest in diversified investment options. This growth supports financial stability and offers more opportunities for investors.

4. Equity Market Performance

• Equity Turnover Increase: The equity market experienced a significant rise in total turnover by 68.5% to TZS 255.2 billion, driven by notable transactions like the acquisition of a major shareholding in Tanga Cement Plc. This increase demonstrates a robust market for equities, providing companies with capital for growth and development.

5. Market Capitalisation

• Depth of Equity Market: Although the ratio of total market capitalization to GDP decreased to 9.8% from 11.9%, the substantial equity turnover and active trading suggest a growing market depth and the potential for future growth.

6. Foreign Investor Participation

• Significant Foreign Involvement: The high level of foreign investor participation indicates that Tanzania is an attractive destination for international investors. This inflow of foreign capital can drive economic growth, create jobs, and stimulate various sectors of the economy.

7. Primary Market Activity

• Government Securities: The increase in yields for government securities and the average undersubscription of bond auctions by 9.0% suggest a cautious yet active investment environment. Higher yields can attract more investment in government projects, contributing to economic development.

Implications for Economic Development

• Capital Availability: The increased investment and trading activities in the capital market ensure that businesses have access to the necessary capital for growth and expansion, which is vital for economic development.
• Financial Inclusion and Investor Confidence: The growth in collective investment schemes and substantial foreign investor participation reflect increasing financial inclusion and confidence in the market. This confidence is crucial for sustained economic growth and stability.
• Economic Resilience: The resilience of the capital market amidst global financial challenges highlights the robustness of Tanzania's financial system. A strong capital market can buffer the economy against external shocks and support long-term development.
• Infrastructure and Development Projects: The active primary market for government securities suggests that the government can secure funding for infrastructure and development projects, which are essential for economic progress.

Steady Economic Growth and Financial Stability in Tanzania

Macroeconomic Environment

1. Global Context:
   • The global economy showed resilience in 2023 despite high interest rates, sluggish trade, and geopolitical conflicts.
   • Global inflation decreased to 5.9% in 2023 from 9.2% in 2022, with a projection to further decelerate to 4.8% in 2024.
   • The global economic growth slowed to 3.1% in 2023 from 3.5% in the previous year due to supply-chain disruptions, geopolitical uncertainty, prolonged war in Ukraine, climate-related disasters, and tight monetary policies.
   • The IMF revised its global economic growth projection for 2024 to 3.1%, supported by the strengthening of the US, Emerging Markets, Developing Economies, and fiscal support in China​​.

Household Debts

1. Financial Condition:
   • Household disposable income increased, attributed to higher salaries for government employees and new employment opportunities.
   • Household debt-to-income ratio rose slightly to 52.8% in 2023 from 51.0% in 2022, due to increased salary income and debt repayments​​.
   • Household borrowing and repayment improved, with an increase in disbursed and outstanding personal loans. This trend is due to a higher appetite for bank lending to households and improved borrowers' ability to repay debts​​.

Banking Sector

1. Banking Sub-Sector:
   • The banking sub-sector-maintained robustness and stability with sufficient capital, liquidity, and minimized credit risk.
   • Total assets increased by 17.4% to TZS 54,263.0 billion in 2023, mainly driven by increased deposits.
   • The top six banks, considered systemically important, accounted for more than 65.2% of total deposits, necessitating close monitoring for systemic risks​.
   • Total funding improved by 17.5% to TZS 49,130.6 billion in 2023, with the ratio of core deposits to total funding increasing to 60.0%​​.
   • Loans, advances, and overdrafts dominated banking sector assets, accounting for 57.2% of the total assets​.

Non-Bank Sector Risk

1. Non-Bank Sector:
   • This sector includes insurance, social security, and open-ended collective investment schemes.
   • Total financial system assets grew to TZS 75,288,430.0 million in 2023, with banks accounting for 72.1% of GDP and 31.9% of total financial system assets​.

Tanzania is on a path of steady economic development, characterized by increasing financial stability, improving household welfare, and a supportive environment for business growth.

Macroeconomic Stability

• Resilience in the Global Context: Tanzania's economy is part of a global economy that has shown resilience despite significant challenges such as high interest rates, geopolitical conflicts, and climate-related disasters.
• Inflation Control: The global trend of decreasing inflation suggests potential positive spillover effects for Tanzania, contributing to economic stability.

Household Financial Health

• Increasing Disposable Income: The rise in household disposable income, driven by higher salaries for government employees and new employment opportunities, indicates improved economic welfare.
• Manageable Household Debt: Despite an increase in the household debt-to-income ratio to 52.8%, the rise in income and better debt repayment capacity reflect a healthy and sustainable growth in household borrowing.

Corporate Sector Strength

• Rebound in Business Activities: Improvement in non-financial corporate financing suggests a recovery in business activities, which is crucial for economic growth and job creation.

Robust Banking Sector

• Growth in Assets and Deposits: The significant increase in banking sector assets and deposits points to a strong and growing financial sector.
• Systemic Importance of Major Banks: The dominance of the top six banks highlights the need for vigilant regulatory oversight to mitigate systemic risks, ensuring financial stability.
• Loan Growth: The banking sector's focus on loans, advances, and overdrafts suggests a supportive environment for business and personal finance, facilitating economic activities.

Non-Bank Financial Sector

• Expansion of Financial Assets: The growth in total financial system assets, including the non-bank sector, indicates a broadening of the financial system and diversification of financial services available to businesses and individuals.

Implications for Tanzania's Economic Development

• Economic Growth: The positive trends in household income, corporate financing, and banking sector stability are likely to support sustained economic growth.
• Financial Inclusion: The improvement in household borrowing and repayment capacity suggests enhanced financial inclusion, which is critical for broad-based economic development.
• Investment Opportunities: The expanding financial assets and stable economic environment may attract both domestic and foreign investments, further boosting economic development.
• Policy and Regulatory Focus: Ensuring vigilant oversight of the financial sector, particularly the systemically important banks, will be essential in maintaining financial stability and supporting economic growth.

VEHICLE PARKING SIGNIFICANTLY IMPACT THE ECONOMIC DEVELOPMENT OF DAR ES SALAAM

Introduction
The city of Dar es Salaam is one of the fastest-growing cities in Africa. This growth is accompanied by an increase in the population and the use of vehicles. Parking challenges have become an important part of discussions about economic development and urban well-being. This study examine the impact of vehicle parking on the economic development of Dar es Salaam, considering the population expected to reach 8 million.

Global Context

• Urban Growth and Vehicles: According to United Nations reports, 55% of the world's population lives in urban areas, and this number is expected to increase to 68% by 2050. Urban growth comes with an increase in vehicle usage, with over 1.4 billion vehicles worldwide by 2023.
• Parking Challenges: Large cities like New York, Tokyo, and London have invested in parking infrastructure and traffic control policies to reduce congestion and improve economic development. The cost of constructing parking facilities can reach up to $1.5 billion per project in major cities.

African Context

• Urban Growth: Africa is experiencing rapid urban growth, with 40% of its residents living in urban areas, expected to rise to 60% by 2050. This implies an increase in vehicles and challenges in parking infrastructure.
• Parking Challenges: Cities like Lagos, Nairobi, and Johannesburg have long faced parking challenges. For instance, Lagos estimates losing over $1 billion annually due to traffic congestion.

East African Context

• Urban Growth: East Africa is witnessing rapid urban growth, with Nairobi growing at a rate of 4% annually. This leads to an increase in vehicles and parking infrastructure challenges.
• Parking Projects: Cities like Nairobi and Kampala have begun investing in parking infrastructure and road improvements to reduce congestion. A four-story parking project in Nairobi is estimated to cost over $20 million.

Tanzania and Dar es Salaam Context

• Growth of Dar es Salaam: According to the 2022 census, Dar es Salaam has a population of 5.38 million, expected to reach 8 million by 2030.
• Number of Vehicles: Tanzania had over 1.5 million vehicles by 2023, with a large percentage located in Dar es Salaam.
• Parking Challenges: Major challenges include traffic congestion, lack of parking spaces, and an increase in road accidents. For example, traffic congestion is estimated to cost the city's economy over $200 million annually.

Development Opportunities

• Infrastructure Innovation: Investing in modern parking infrastructure such as multi-story parking, public parking, and digital parking management technologies can improve efficiency.
• Digital Technologies: Utilizing technology such as digital payment systems, parking space tracking through mobile apps, and electronic parking systems can reduce congestion and increase local government revenue.
• Traffic Management Policies: Implementing robust traffic and parking management policies such as paid parking and designated public parking areas.

This study demonstrate how vehicle parking significantly impact the economic development of Dar es Salaam. Considering the existing challenges and opportunities, the government and private sector can collaborate to develop better parking infrastructure, reduce traffic congestion, and strengthen the city's economy.

References

• United Nations, World Cities Report 2020.
• World Bank, East African Economic Outlook 2021.
• National Statistics of Tanzania, Population and Housing Census 2022.

Tanzania's Rising Attractiveness in Foreign Direct Investment: A 2023 Snapshot

Global Context

In the global context, Tanzania has shown modest but steady growth in attracting Foreign Direct Investment (FDI). Inflows into the country have contributed significantly to various sectors, particularly in natural resources, infrastructure, and tourism. Tanzania's FDI inflows in 2023 were reported at $1.3 billion, showing a slight increase from the previous year​​. Despite the global downturn in FDI, Tanzania's relative stability and economic reforms have continued to attract investment.

Africa Context

In Africa, FDI inflows decreased by 3% in 2023, totaling $53 billion. While some regions and industries within Africa saw declines, there were sectors like chemicals and electronics which registered increases in project values. The top recipients included countries like Egypt and Nigeria, which attracted larger volumes of FDI. European countries remain significant investors in Africa, with the Netherlands, France, the United States, and the United Kingdom holding substantial FDI stocks in the continent​​. The value of greenfield projects announced in Africa dropped from $196 billion in 2022 to $175 billion in 2023, although the number of projects increased by 7%​​.

East Africa Context

In the East African context, Tanzania is one of the leading recipients of FDI. The region collectively attracted significant investments, and Tanzania's $2.4 billion positioned it competitively among its neighbors. This influx is partly driven by investments in key sectors such as mining, manufacturing, and services, which are critical for the country's economic development.

Tanzania stands out as a notable destination for FDI. The region overall has attracted various investments, particularly in sectors like renewable energy, infrastructure, and manufacturing. The East African Community (EAC) has been working towards creating a more favorable investment climate, which has positively impacted Tanzania's ability to attract FDI. Specific data on Tanzania within the East African context indicates that despite regional challenges, the country continues to see investment flows aimed at exploiting its rich natural resources and growing consumer market​​.

Within East Africa, Tanzania is one of the leading countries in terms of attracting FDI. Inflows have been substantial, contributing to significant economic activities and infrastructure development. Compared to its neighbors:

• Kenya received slightly less, with FDI inflows of approximately $1.504 billion.
• Uganda received around $2.886 billion, reflecting a higher level of FDI but with specific sectors drawing investment.

Tanzania's Economic Development Through FDI

FDI has been crucial for Tanzania's economic development, playing a key role in several sectors:

• Mining and Natural Resources: Significant investments have been made in the mining sector, contributing to economic growth and exports.
• Infrastructure Development: FDI has been instrumental in developing infrastructure projects, including roads, ports, and energy facilities.
• Manufacturing and Industry: Investments in manufacturing have helped diversify the economy, creating jobs and enhancing industrial capacity.
• Tourism: The tourism sector has benefited from foreign investments, enhancing facilities and services, thereby attracting more international visitors.

Overall, FDI has not only provided capital but also technology transfer, managerial expertise, and access to international markets, which are critical for sustainable economic growth.

Figures and Data

• Global FDI Flows: Declined from $1.6 trillion in 2021 to $1.3 trillion in 2023​​.
• Africa FDI Inflows: Reduced by 3% to $53 billion in 2023, with notable investments in renewable energy and manufacturing sectors​.
• East Africa: Continues to attract diverse investments, with Tanzania playing a significant role in the region's FDI landscape​.

These trends highlight Tanzania's strategic importance in both regional and global investment landscapes, emphasizing the need for continued efforts to improve the investment climate and leverage FDI for economic development.

Economic Development Impact

FDI has played a critical role in Tanzania's economic development by:

• Creating Jobs: The influx of FDI has led to job creation in various sectors such as mining, manufacturing, and services.
• Enhancing Infrastructure: Significant investments in infrastructure projects, including roads, ports, and energy, have been facilitated by foreign investments.
• Technology Transfer: FDI has brought in new technologies and expertise, improving productivity and competitiveness.
• Diversifying the Economy: FDI has contributed to diversifying Tanzania's economy, reducing reliance on traditional sectors like agriculture and mining.

References:

• United Nations Conference on Trade and Development (UNCTAD). "World Investment Report 2024." Accessed June 29, 2024.
• World Bank. "Foreign Direct Investment Inflows to Tanzania." Accessed June 29, 2024.
• "Investment Trends Monitor." January 2024. Accessed June 29, 2024.
• East African Community (EAC). "Annual Report on Investment in East Africa." Accessed June 29, 2024.

2024/25 BUDGET: A PATHWAY TO ECONOMIC GROWTH AND IMPROVED INCOMES FOR ORDINARY TANZANIANS

The 2024/25 Budget, with a total allocation of TZS 49.35 trillion, aims to foster economic growth and improve incomes for ordinary Tanzanians. Projected GDP growth is set to rise from 5.1% in 2023 to 5.4% in 2024, driven by increased investments in agriculture (26.5% of GDP), construction (13.2%), and mining (9.0%). Key measures include a 10% increase in tax revenue to TZS 29.41 trillion, a 30% allocation for development expenditure on energy and transportation, and targeted support for local industries and agriculture. However, managing a national debt of TZS 91.7 trillion and inflation will be crucial to ensure sustainable benefits for citizens.

Tanzania’s 2024/2025 Budget by the Ministry of Construction

Revenue and Expenditure

Revenue:

• The Ministry of Construction was allocated TZS 48,395,392,000 for recurrent expenditure.
• TZS 1,419,843,057,000 was allocated for development projects.

Expenditure:

• Out of the allocated TZS 48,395,392,000 for recurrent expenditure, TZS 43,958,274,000 was for salaries and TZS 4,437,118,000 for other expenditures.
• By April 2024, TZS 48,665,781,258.75 had been released, with TZS 46,307,923,275.52 for salaries and TZS 2,357,857,983.23 for other expenditures.
• For development projects, TZS 1,417,143,257,000 was available after reallocating TZS 2,699,800,000 to the Ministry of Transport.

Achievements in Budget Implementation

• Project Implementation: Significant progress in infrastructure projects, including roads, bridges, and ferries. For example, procurement of new ferries and maintenance of ferry infrastructure was ongoing .
• Revenue Collection: Successful collection of TZS 662,508,672,160 by April 2024, which is 77% of the annual budget .
• Quality Control: Inspection and quality assurance of 562 projects using internal and external experts, ensuring value for money .
• Improvement in Road Usage Compliance: Reduced overloading of vehicles from 0.48% to 0.26%, generating revenue from road damage fees and abnormal load permits .

Challenges in Budget Implementation

• Financial Allocation: While funds were allocated, the disbursement process faced delays, affecting timely project execution.
• Local Contractor Participation: Enhancing the capacity and participation of local contractors in major projects remained a challenge, though measures were being taken to improve this .
• Regulatory Adjustments: Continuous adjustments in procurement regulations were needed to facilitate smoother project implementation and better inclusion of local contractors .

Projects Successfully Implemented in 2023/2024 through the Budget

1. Road and Bridge Projects:
   • Main and Regional Roads: The Ministry of Construction through TANROADS managed 37,225.71 kilometers of roads, including 12,336.02 kilometers of main roads and 24,889.69 kilometers of regional roads.
   • Asphalt Roads: Construction of 350 kilometers of asphalt roads and rehabilitation of 25 kilometers of asphalt roads.
   • Bridges: Continued construction of 13 bridges.
2. Infrastructure Development:
   • Strategic Road Projects: Development of strategic roads aimed at economic enhancement, including tourism, agriculture, mining, ports, and industrial areas.
   • Urban Congestion Reduction: Projects to reduce congestion in major cities such as Dar es Salaam, Arusha, Mwanza, Mbeya, and Dodoma.
   • Provincial Connections: Construction of roads connecting regional capitals and neighboring countries with asphalt, including defense roads.
3. New Road Designs:
   • Designing new urban roads considering the needs of all road users, including pedestrians, cyclists, and non-motorized vehicles.
4. Airport Projects:
   • Completion of airport projects in Msalato, Geita, Kigoma, Tabora, Songwe, Mtwara, Sumbawanga, Shinyanga, Iringa, Musoma, Songea, Tanga, and Lake Manyara.
5. Road Safety Projects:
   • Construction of weighbridges, bypass roads, and pedestrian paths to enhance road safety.
6. Revenue Collection:
   • Successfully collected TZS 662,508,672,160 by April 2024, which is 77% of the annual budget.
7. Quality Assurance:
   • Inspection and quality control of 562 projects using internal and external experts to ensure value for money.
8. Vehicle Overloading Control:
   • Reduced vehicle overloading from 0.48% to 0.26%, generating revenue from road damage fees and abnormal load permits​​.

2024/2025 Budget in Terms of Revenue and Expenditure

Revenue

The Ministry of Construction's budget for the 2024/2025 financial year is designed to align with various national development strategies, including the National Development Vision 2025, the Third National Five-Year Development Plan (2021/22 – 2025/26), and the 2020 CCM Election Manifesto. The key areas of revenue consideration are:

• Internal Funds: TZS 1,141,803,989,000 from internal sources.
• External Funds: TZS 546,084,725,000 from external sources.

Expenditure

The total budget requested for the 2024/2025 financial year amounts to TZS 1,769,296,152,000, divided as follows:

1. Recurrent Expenditure:
   • Total Allocation: TZS 81,407,438,000
   • Salaries: TZS 76,588,233,000
   • Other Recurrent Expenditures: TZS 4,819,205,000
2. Development Expenditure:
   • Total Allocation: TZS 1,687,888,714,000
   • Internal Development Funds: TZS 1,141,803,989,000, including TZS 599,756,467,800 from the Road Fund and TZS 542,047,521,200 from the main government fund.
   • External Development Funds: TZS 546,084,725,000

Key Priorities

The 2024/2025 budget focuses on several priority areas, including:

• Repair of Infrastructure: Maintenance of roads and bridges damaged by El Nino rains and Cyclone Hidaya.
• Strategic Road Projects: Construction and continuation of roads that open economic opportunities such as tourism, agriculture, mining, ports, and industrial zones.
• Urban Congestion Reduction: Projects to reduce congestion in major cities including Dar es Salaam, Arusha, Mwanza, Mbeya, and Dodoma.
• Provincial and International Connections: Construction of roads connecting regional capitals and neighboring countries with asphalt standards, including defense roads.
• New Road Designs: Designing new urban roads considering the needs of all users, including athletes, pedestrians, and non-motorized vehicles.
• Airport Projects: Completion of various airport projects across the country.
• Road Safety Projects: Construction of weighbridges, bypass roads, and pedestrian paths to enhance road safety.
• Capacity Building: Strengthening the capacity of local experts to manage large projects.
• ICT Systems: Enhancing ICT systems for improved performance.
• Cost-effective Technologies: Implementing cost-effective road construction technologies, especially in challenging areas.
• TEMESA Transformation: Implementing the 2024-2034 strategy to strengthen TEMESA’s operations.

Potential Challenges in Implementing the 2024/2025 Budget Based on the 2023/2024 Performance

1. Delayed Financial Disbursement:
   • 2023/2024 Issue: In 2023/2024, there were delays in the disbursement of allocated funds, affecting timely project execution.
   • 2024/2025 Impact: If similar delays occur, projects essential for economic growth, such as infrastructure developments and strategic road projects, could be stalled, potentially slowing down economic progress.
2. Revenue Collection Challenges:
   • 2023/2024 Figures: The ministry successfully collected TZS 662,508,672,160 by April 2024, which was 77% of the annual budget.
   • 2024/2025 Targets: With a budget of TZS 1,769,296,152,000, meeting the revenue targets is crucial. If revenue collection falls short, it may lead to budget deficits, impacting planned projects and economic initiatives.
3. Infrastructure Damage and Maintenance Costs:
   • 2023/2024 Events: The budget had to address infrastructure repairs due to El Nino rains and Cyclone Hidaya.
   • 2024/2025 Concerns: Similar or new natural disasters could lead to unplanned expenditures, diverting funds from other critical projects, thus affecting the overall economic growth plan.
4. Local Contractor Participation:
   • 2023/2024 Challenge: Enhancing the capacity and participation of local contractors in major projects was a significant issue.
   • 2024/2025 Potential: If this issue persists, it might hinder the efficiency and timely completion of projects. Moreover, insufficient local contractor involvement could limit the domestic economic benefits of infrastructure projects.
5. Regulatory Adjustments:
   • 2023/2024 Adjustments: Continuous adjustments in procurement regulations were needed for smoother project implementation.
   • 2024/2025 Outlook: Failure to streamline these regulations can cause delays and inefficiencies in project execution, potentially impacting economic growth negatively.
6. Strategic Road and Airport Projects:
   • 2023/2024 Achievements: Significant progress in road and airport projects.
   • 2024/2025 Budget: With a large portion of the budget dedicated to these projects, any delay or inefficiency could directly affect economic growth by hampering connectivity and trade facilitation.
7. Capacity Building and Technology Implementation:
   • 2023/2024 Initiatives: Focus on enhancing local expert capacity and implementing cost-effective technologies.
   • 2024/2025 Needs: Continued investment in these areas is necessary. Failure to do so might result in reliance on expensive foreign expertise and technologies, reducing the overall cost-effectiveness and sustainability of projects.

Economic Growth Considerations with Figures:

• 2023/2024 Budget Utilization:
  • Recurrent Expenditure Allocation: TZS 48,395,392,000
  • Development Expenditure Allocation: TZS 1,419,843,057,000
• 2024/2025 Budget Allocation:
  • Recurrent Expenditure Allocation: TZS 81,407,438,000
  • Development Expenditure Allocation: TZS 1,687,888,714,000

Given the increased budget for 2024/2025, efficient and timely disbursement and utilization of these funds are paramount. The anticipated economic growth heavily relies on the successful implementation of infrastructure projects, improved revenue collection, and the enhanced capacity of local contractors and experts.

Potential Impact on Economic Growth:

• Infrastructure Development: Timely and efficient infrastructure development can significantly boost trade, reduce transportation costs, and improve market accessibility, directly contributing to GDP growth.
• Employment: Successful implementation of projects can create jobs, thus increasing household incomes and stimulating economic activities.
• Revenue Generation: Improved road safety and reduced vehicle overloading can generate additional revenue through road damage fees and abnormal load permits, which can be reinvested in further development projects.