The Food Security Update from June 27, 2024, provides insights into the food inflation rates across various countries in East Africa:

Tanzania

• May 2024: Food inflation in Tanzania was 6.5%.

Kenya

• May 2024: Kenya experienced a food inflation rate of 11.2%.

Uganda

• May 2024: Uganda's food inflation rate was 4.7%.

Rwanda

• May 2024: Food inflation in Rwanda stood at 12.4%.

Democratic Republic of the Congo (DRC)

• May 2024: DRC faced a significantly high food inflation rate of 19.2%.

Burundi

• May 2024: Burundi's food inflation was reported at 9.2%.

Comparative Analysis

1. High Food Inflation:
   • DRC: 19.2%
   • Rwanda: 12.4%
   • Kenya: 11.2%

These countries are experiencing very high food inflation rates, indicating significant pressure on household food expenses. The DRC, in particular, faces the highest rate among the listed countries, which could be due to ongoing conflict and economic instability exacerbating food prices.

1. Moderate Food Inflation:
   • Burundi: 9.2%
   • Tanzania: 6.5%

These rates, while still high, are more moderate compared to the top three. Tanzania's food inflation at 6.5% suggests that while food prices are increasing, the rate is not as steep as in DRC, Rwanda, or Kenya.

1. Lower Food Inflation:
   • Uganda: 4.7%

Uganda has the lowest food inflation rate among these countries, which might indicate better food supply stability or effective inflation control measures in place.

Implications

• Economic Stability: Countries with lower food inflation rates like Uganda might have better economic stability or more effective policies to control inflation.
• Food Security: Higher food inflation in countries like DRC, Rwanda, and Kenya suggests severe food security issues. These countries may require more robust interventions to stabilize food prices and ensure affordable food supply to the population.
• Policy Measures: Tanzania's moderate inflation rate indicates that the country might have some effective measures in place but still needs to monitor and manage inflation to prevent it from escalating.

Projected Food Inflation in Tanzania and East Africa (July-December 2024)

The projected food inflation rates indicate varying degrees of economic and food security challenges across East Africa. Tanzania, with its moderate inflation, will face manageable but notable economic and food security issues. In contrast, countries like DRC and Rwanda will experience severe challenges, impacting both economic stability and food security significantly. Kenya will also face substantial issues, while Uganda is expected to maintain relative stability. Burundi will experience moderate difficulties, affecting its most vulnerable populations.

Efforts to mitigate these impacts should focus on stabilizing food prices, improving food supply chains, and providing targeted support to vulnerable groups to ensure food security and sustain economic growth.

Projected Food Inflation Rates (July-December 2024)

1. Tanzania: Food inflation is expected to slightly increase but remain relatively moderate. By December 2024, the projected rate is around 7-8%.
2. Kenya: Food inflation is projected to continue its upward trend, potentially reaching 12-13% by December 2024.
3. Uganda: Expected to maintain its relatively low food inflation, possibly increasing to around 5-6%.
4. Rwanda: Likely to see continued high food inflation, reaching approximately 13-14%.
5. DRC: High food inflation will persist, potentially escalating to 20-21%.
6. Burundi: Projected to see a slight increase, reaching around 10-11%.

Economic Impact and Food Security

Tanzania

• Economic Development: The moderate increase in food inflation (to 7-8%) could lead to higher household expenditures on food, reducing disposable income for other goods and services. This might slow down economic growth slightly but not severely.
• Food Security: Tanzania is likely to face moderate food security challenges. While the situation will be manageable compared to countries with higher inflation, vulnerable populations might still struggle with food affordability.

Kenya

• Economic Development: Higher food inflation (12-13%) could strain household budgets significantly, leading to reduced spending in other economic sectors and potentially slowing down economic growth.
• Food Security: Severe food security issues are expected, with more households falling into food insecurity due to the high cost of food.

Uganda

• Economic Development: The relatively low food inflation (5-6%) will likely support stable economic growth, with less pressure on household budgets.
• Food Security: Uganda is expected to have better food security conditions compared to its neighbors, maintaining relatively stable access to affordable food.

Rwanda

• Economic Development: Continued high food inflation (13-14%) will strain the economy, reducing consumer spending power and potentially impacting economic growth negatively.
• Food Security: Significant food security challenges are expected, with many households likely to struggle with high food prices.

DRC

• Economic Development: Extremely high food inflation (20-21%) will severely impact the economy, with households facing substantial financial pressure. Economic growth is likely to be very slow or even negative.
• Food Security: DRC will face critical food security issues, with a large portion of the population at risk of severe food insecurity.

Burundi

• Economic Development: Moderate increase in food inflation (10-11%) will put some pressure on household budgets but might not drastically impact economic growth.
• Food Security: Burundi will face moderate to severe food security challenges, with vulnerable populations being the most affected.

Key Issues

1. Increase in Number of Bank Agents: From March 2023 to March 2024, the number of bank agents in Tanzania increased by 37.4%, reaching 110,295.
2. Volume of Transactions: Cash deposits and withdrawals saw an increase of 15.3% and 18.6%, respectively.
3. Value of Transactions: The value of cash deposits rose by 54.5%, and withdrawals by 47.2%.

Hence

• Agent Numbers: Increased by 37.4% from March 2023 to March 2024.
• Transaction Volumes: Increased for both deposits (15.3%) and withdrawals (18.6%).
• Transaction Values: Significant growth in the value of deposits (54.5%) and withdrawals (47.2%).

The agent banking transactions in Tanzania reveals several key insights about the country's economic development

The agent banking transactions in Tanzania reflects a positive trajectory in the country’s economic development. Increased access to financial services, rising economic activities, regional growth, and the integration of technology are key indicators of progress. These trends not only signify economic growth but also the effectiveness of policies aimed at financial inclusion and economic empowerment.

1. Financial Inclusion and Access to Banking Services

The significant increase in the number of bank agents (37.4% from March 2023 to March 2024) indicates improved access to banking services across the country. This expansion supports the broader financial inclusion agenda, enabling more individuals, especially in rural and underserved areas, to participate in the formal financial system.

2. Increased Economic Activity

The growth in both the volume and value of transactions (15.3% and 54.5% for deposits, 18.6% and 47.2% for withdrawals) reflects heightened economic activity. More transactions suggest that more people are engaging in financial transactions, whether for personal savings, business activities, or consumption, indicating a vibrant and growing economy.

3. Trust in Banking Systems

The substantial increase in the value of deposits and withdrawals signifies growing trust in the banking system. As people increasingly use banking agents for their financial transactions, it shows that they have confidence in the security and reliability of these services. This trust is crucial for the stability and growth of the financial sector.

4. Regional Economic Growth

The data breakdown by regions (Central, Dar es Salaam, Lake, Northern, South Eastern, and Southern Highlands) shows that economic activity and access to banking services are expanding across different parts of the country. Particularly notable is the significant growth in regions like Dar es Salaam and the Lake zone, suggesting regional economic development and reduced economic disparity.

5. Role of Technology in Economic Development

The increase in agent banking highlights the role of technology in driving economic development. By leveraging mobile and digital technologies, banking agents can reach more people, facilitating easier and more efficient financial transactions. This technological integration is a positive indicator of modernizing the economy and improving efficiency.

6. Economic Empowerment

Greater access to banking services empowers individuals and businesses by providing them with the means to save, invest, and manage their finances more effectively. This empowerment can lead to increased entrepreneurial activities, higher savings rates, and more investments, all contributing to overall economic growth.

7. Policy Effectiveness

The efforts to promote agent banking reflect effective policy measures by the government and financial institutions to enhance financial inclusion and economic participation. The positive trends in agent banking transactions suggest that these policies are successfully fostering a more inclusive and dynamic economy.

Bank Deposits

Deposits Growth and Distribution:

• Overall Growth: Bank deposits across all zones in Tanzania grew by 12.3% from March 2023 to March 2024.
• Total Deposits: The total deposits increased to TZS 31,424.6 billion.
• Key Drivers: This growth was driven by banks’ efforts in mobilizing savings through financial education and innovative products and services.

Zone-wise Breakdown:

• Dar es Salaam Zone: This zone accounted for the largest share of deposits at 59.4%, amounting to TZS 18,666.2 billion. The growth here was 9.0%.
• Central Zone: Deposits grew by 10.9% to TZS 3,412.7 billion, representing 10.9% of the total.
• South Eastern Zone: Deposits grew by 6.9% to TZS 877.0 billion, making up 2.8% of the total.
• Lake Zone: This zone saw the highest growth rate of 46.1%, with deposits reaching TZS 3,482.6 billion, accounting for 11.1% of the total.
• Northern Zone: Deposits increased by 5.0% to TZS 3,654.5 billion, representing 11.6% of the total.
• Southern Highlands Zone: Deposits grew by 21.3% to TZS 1,331.6 billion, making up 4.2% of the total.

Table 1: Bank Deposits

Bank Loans

Loans Growth and Distribution:

• Overall Growth: Banks' loans to various economic activities grew by 21% from March 2023 to March 2024.
• Total Loans: The total loans increased to TZS 29,735.9 billion.
• Key Drivers: The growth was mainly due to improved economic activities, a better business environment, and supportive policies.

Zone-wise Breakdown:

• Dar es Salaam Zone: This zone accounted for the largest share of loans at 53.8%, amounting to TZS 15,989.1 billion. The growth here was 12.8%.
• Central Zone: Loans grew by 57.1% to TZS 4,070.3 billion, representing 13.7% of the total.
• South Eastern Zone: Loans grew by 15.7% to TZS 1,424.9 billion, making up 4.8% of the total.
• Lake Zone: Loans increased by 31.1% to TZS 4,308.8 billion, accounting for 14.5% of the total.
• Northern Zone: Loans grew by 28.2% to TZS 3,163.8 billion, representing 10.6% of the total.
• Southern Highlands Zone: Loans slightly decreased by 5.4% to TZS 779.0 billion, making up 2.6% of the total.

Table 2: Bank Loans

The analysis indicates significant growth in both deposits and loans, with Dar es Salaam being the dominant region for both. The remarkable increase in deposits in the Lake Zone and loans in the Central Zone highlights regional economic activities' positive trends.

Economic Development Insights

The bank deposits and loans underscores Tanzania's positive economic development trends. With significant growth in financial inclusion, regional economic activities, and a supportive policy environment, Tanzania is poised for continued economic growth and development. However, attention to regional disparities and sustained investment in emerging regions will be vital to ensure balanced and inclusive economic progress.

1. Increased Bank Deposits:

• Overall Growth: The 12.3% increase in bank deposits indicates a growing confidence in the banking sector and the economy. This growth reflects an increase in savings and financial inclusion, which are crucial for economic stability and growth.
• Dar es Salaam Dominance: With 59.4% of the total deposits, Dar es Salaam's leading position highlights its role as the economic hub of Tanzania. The concentration of deposits in this zone suggests robust economic activities and higher income levels.
• Regional Growth: Significant growth in regions like the Lake Zone (46.1%) and the Southern Highlands (21.3%) suggests economic diversification and development beyond the primary economic centers. This could indicate growing economic opportunities and infrastructure development in these regions.

2. Increased Bank Loans:

• Overall Growth: A 21% increase in bank loans signifies an expanding credit market, which supports business growth, entrepreneurship, and investment in various economic activities. This is a positive indicator of economic dynamism and a supportive policy environment.
• Sectoral Distribution: With 68.3% of loans going to personal, trade, agriculture, and manufacturing activities, this distribution reflects balanced growth across essential economic sectors. It suggests a focus on sectors that can drive economic growth and create jobs.
• Central Zone's Growth: The Central Zone's remarkable 57.1% growth in loans highlights significant economic activities and development in this region, which could be driven by new investments, agricultural expansion, or industrial activities.

3. Regional Economic Disparities and Development:

• Dar es Salaam's Dominance: Despite growth in other regions, Dar es Salaam remains the dominant economic zone. This concentration highlights the need for policies to ensure balanced regional development to prevent over-reliance on one region.
• Emerging Regions: The notable growth in deposits and loans in regions like the Lake Zone and Central Zone indicates emerging economic opportunities. This regional development can reduce economic disparities and promote inclusive growth.

4. Economic Policy Implications:

• Supportive Policies: The growth in loans suggests effective and supportive government policies that encourage lending and economic activities. These policies may include improved business environments, better regulatory frameworks, and targeted economic programs.
• Financial Inclusion: The increase in bank deposits, especially through financial education and innovative products, reflects efforts to enhance financial inclusion. Greater financial inclusion can lead to more equitable economic development and poverty reduction.

5. Future Economic Prospects:

• Sustained Growth: The continuous increase in deposits and loans suggests that Tanzania is on a growth trajectory. Sustained economic policies, infrastructure development, and investment in key sectors will be crucial to maintain this growth.
• Investment Opportunities: The growing loan market indicates expanding investment opportunities in Tanzania. Sectors such as agriculture, trade, manufacturing, and personal finance are likely to attract more investments, fostering further economic development.

Tax Revenue Collections Overview

During the review period, tax revenue collections in Tanzania reached TZS 6,511.7 billion, which is 95.3% of the target. This performance was driven by several factors, including increased imports of merchandise, intensified use of electronic fiscal devices, improved economic activities, and enhanced tax compliance due to public awareness campaigns. A notable overperformance was observed in the South-Eastern zone, primarily due to the government's decision to route cashew nut exports through Mtwara port instead of Dar es Salaam port. Dar es Salaam zone was the dominant contributor, accounting for 89% of the total tax revenue collections.

Detailed Zone-Wise Tax Revenue Performance

Key Observations

1. Central Zone:
   • Collected TZS 84.2 billion against a target of TZS 80.5 billion, achieving 104.6% of the target.
   • This represents a 12.3% decrease from the previous year.
2. Dar es Salaam Zone:
   • Collected TZS 5,798.2 billion against a target of TZS 6,136.5 billion, achieving 94.5% of the target.
   • This zone saw a 13.9% increase in revenue compared to the previous year, maintaining its dominance with an 89% share of total collections.
3. Lake Zone:
   • Collected TZS 116.0 billion against a target of TZS 109.3 billion, achieving 106.2% of the target.
   • Revenue decreased by 19.1% compared to the previous year.
4. Northern Zone:
   • Collected TZS 367.9 billion against a target of TZS 389.8 billion, achieving 94.4% of the target.
   • This zone experienced a slight decrease of 1.1% from the previous year.
5. South-Eastern Zone:
   • Collected TZS 57.0 billion against a target of TZS 32.7 billion, achieving 174.4% of the target.
   • Revenue increased by 32.3%, partly due to the shift of cashew nut exports to Mtwara port.
6. Southern Highlands Zone:
   • Collected TZS 88.3 billion against a target of TZS 84.6 billion, achieving 104.4% of the target.
   • This zone saw a 1.7% increase in revenue compared to the previous year.
7. Overall Performance:
   • Total tax revenue collections amounted to TZS 6,511.7 billion, which is 95.3% of the target.
   • There was an overall increase of 11.7% in tax revenue collections compared to the previous year.

Tax Revenue Collections and Economic Development in Tanzania

The tax revenue collection data suggests that Tanzania is on a positive economic trajectory. The increase in imports, improved tax compliance, technological advancements, and regional economic activities all point to robust economic growth. The government’s efforts to modernize tax collection and promote economic activities in different regions are yielding positive results, contributing to Tanzania's overall economic development. However, there are still challenges that need to be addressed to ensure balanced growth and sustained economic progress across all regions.

1. Economic Growth and Increased Imports:

• Increased Imports of Merchandise Goods: The rise in imports indicates growing domestic demand for goods, suggesting economic expansion and increased consumer purchasing power. This growth in imports likely resulted from improved economic activities, indicating a thriving economy.

2. Technological Advancements:

• Intensified Use of Electronic Fiscal Devices (EFDs): The adoption of EFDs reflects technological advancement and modernization in the tax collection process. This not only increases efficiency but also reduces tax evasion, contributing to higher revenue collections.

3. Improved Tax Compliance:

• Public Awareness Campaigns: Continuous public awareness campaigns have improved tax compliance. Enhanced compliance indicates that businesses and individuals are increasingly adhering to tax laws, which is essential for sustainable revenue growth.

4. Regional Economic Activities:

• Dar es Salaam's Dominance: Accounting for 89% of tax revenue collections, Dar es Salaam remains the economic hub of Tanzania. Its significant contribution reflects the concentration of business activities and economic opportunities in the city.
• South-Eastern Zone Performance: The outstanding performance of the South-Eastern zone, driven by the shift of cashew nut exports to Mtwara port, indicates regional economic development. This shift has likely spurred economic activities in the region, leading to increased tax revenue.

5. Diversification of Economic Activities:

• Cashew Nut Export Shift: The decision to route cashew nut exports through Mtwara port instead of Dar es Salaam port suggests efforts to diversify economic activities and develop other regions. This can lead to more balanced economic development across the country.

6. Challenges and Opportunities:

• Variations in Regional Performance: The varying performance across regions highlights challenges and opportunities for targeted economic policies. For instance, the Lake zone's significant decrease in revenue suggests the need for focused interventions to boost economic activities and tax compliance.
• Overall Performance and Growth: Despite some regional variations, the overall tax revenue performance is strong, with an 11.7% increase from the previous year. This growth is a positive indicator of Tanzania's economic resilience and development.

Insights from March 2024 Inflation Trends

During the quarter ending March 2024, Tanzania experienced a general decrease in headline inflation, which was primarily driven by a slowdown in food prices across various regions (or zones). However, the Dar es Salaam zone witnessed an increase in headline inflation due to a rise in prices of non-food items such as charcoal, firewood, and sewage and wastewater service charges.

Annual Average Headline Inflation by Zone

The data in Table 1.1 below shows the annual average headline inflation across different zones in Tanzania from March 2023 to March 2024.

Table 1: Annual Average Headline Inflation (Percent)

Source: National Bureau of Statistics and Bank of Tanzania computations

Analysis of Headline Inflation

• National Level: The national average headline inflation decreased from 4.8% in March 2023 to 3.0% in March 2024.
• Central Zone: Experienced a significant drop from 5.4% in March 2023 to 1.3% in March 2024.
• Dar es Salaam Zone: Saw an increase in headline inflation from 4.2% in March 2023 to 6.5% in March 2024. This was primarily due to higher prices of non-food items.
• Lake Zone: Experienced a substantial decrease from 5.0% in March 2023 to 0.7% in March 2024.
• Northern Zone: Showed a decrease from 4.5% in March 2023 to 3.3% in March 2024.
• South Eastern Zone: Decreased from 4.9% in March 2023 to 1.5% in March 2024.
• Southern Highlands: Had a slight decrease from 4.9% in March 2023 to 3.9% in March 2024.

Insights on Tanzania's Economic Development from Inflation Trends

Overall Economic Stability

The general decrease in national headline inflation from 4.8% in March 2023 to 3.0% in March 2024 indicates a period of economic stability and effective monetary policies. Lower inflation often suggests that the cost of living is more stable, which can enhance consumer confidence and spending.

Regional Economic Disparities

The varying inflation rates across different zones highlight regional disparities in economic conditions:

• Central and South Eastern Zones: Significant decreases in inflation suggest effective control over prices and possibly better supply chain management and food production stability.
• Lake and Northern Zones: The substantial decrease in the Lake Zone, from 5.0% to 0.7%, and the decrease in the Northern Zone indicate improvements in food supply or lower demand pressures, contributing to price stability.
• Southern Highlands: A modest reduction in inflation implies steady economic conditions but perhaps less aggressive measures or challenges unique to the region.

Challenges in Dar es Salaam

The rise in inflation in Dar es Salaam, from 4.2% to 6.5%, points to economic challenges:

• Non-Food Price Increases: Higher prices for essential non-food items like charcoal, firewood, and sewage services suggest supply constraints or increased demand. This could indicate urbanization pressures, higher living costs, and infrastructure issues.
• Urban Economic Pressures: As Tanzania’s largest city and economic hub, Dar es Salaam faces unique pressures, including population growth, housing shortages, and service delivery challenges.

Implications for Policy and Development

• Targeted Interventions: The government may need to focus on targeted interventions in regions like Dar es Salaam to address non-food inflation drivers, ensuring essential services are affordable.
• Regional Development Programs: Continued support and development programs in regions with lower inflation can help sustain economic stability and address any underlying issues.
• Infrastructure Investments: Addressing infrastructure and service delivery issues in high-inflation areas can help mitigate inflationary pressures and promote equitable development.
• Agricultural and Food Supply Stability: The overall decrease in food prices points to successful agricultural policies, but continuous monitoring and support are necessary to maintain this trend.

Economic Development Issues

The inflation trends indicate that Tanzania is experiencing overall economic stability with effective control over food prices. However, regional disparities, particularly the rising inflation in Dar es Salaam, highlight the need for targeted economic policies and infrastructure investments to ensure balanced and inclusive economic development across the country.

Enhancing Economic Development through Strategic Local Revenue Mobilization: Insights from Tanzania's Fiscal Year 2023/24

Overview:

Local Government Authorities in Tanzania have shown promising revenue collection from their own sources for the fiscal year 2023/24. The cumulative revenue collection reached TZS 854.8 billion, which is 76.8% of the target set for the year (TZS 1,112.5 billion). This indicates a high likelihood of achieving the annual target.

Performance by Zone:

The performance varies across different zones, with the Dar es Salaam and Lake zones contributing the most significant shares.

Table 1: Local Government Revenue Performance by Zone (Billions of TZS)

Key Points:

1. Dar es Salaam Zone:
   • Target: TZS 240.1 billion
   • Actual: TZS 198.7 billion
   • Actual/Target Ratio: 82.8%
   • Percentage Share: 23.2%
   • Notable for having the highest share of revenue collection.
2. Lake Zone:
   • Target: TZS 230.1 billion
   • Actual: TZS 176.3 billion
   • Actual/Target Ratio: 76.6%
   • Percentage Share: 20.6%
   • Second highest in terms of revenue collection share.
3. South Eastern Zone:
   • Target: TZS 149.4 billion
   • Actual: TZS 130.4 billion
   • Actual/Target Ratio: 87.3%
   • Percentage Share: 15.3%
   • Highest actual/target ratio among all zones.
4. Central Zone:
   • Target: TZS 173.0 billion
   • Actual: TZS 129.6 billion
   • Actual/Target Ratio: 74.9%
   • Percentage Share: 15.2%
5. Northern Zone:
   • Target: TZS 167.2 billion
   • Actual: TZS 124.0 billion
   • Actual/Target Ratio: 74.2%
   • Percentage Share: 14.5%
6. Southern Highlands Zone:
   • Target: TZS 152.7 billion
   • Actual: TZS 95.8 billion
   • Actual/Target Ratio: 62.7%
   • Percentage Share: 11.2%
   • Lowest actual/target ratio among all zones.

Implications:

• The overall good performance, especially in the Dar es Salaam and Lake zones, is attributed to improved economic activities and increased usage of point-of-sale devices.
• The higher actual/target ratio in the South Eastern zone suggests effective revenue collection strategies.
• The data indicates a potential for other zones to enhance their revenue collection mechanisms to meet or exceed their targets.

Local government revenue collections in Tanzania for the 2023/24 fiscal year

Local government revenue collections in Tanzania provides a snapshot of economic activities, regional disparities, technological adoption, and policy implications. It serves as a valuable tool for assessing economic health, identifying growth opportunities, and formulating targeted development strategies to foster sustainable economic development across all regions of Tanzania.

1. Economic Activity and Growth: The increased revenue collection suggests improved economic activities within Tanzania. When local governments collect more revenue, it often indicates a growing economy where businesses are thriving and contributing taxes.
2. Regional Economic Disparities: The distribution of revenue across different zones highlights regional economic disparities. Zones like Dar es Salaam and the Lake Zone contribute significantly more to revenue collection compared to others. This can reflect differences in economic development, infrastructure, and business activities among these regions.
3. Infrastructure and Technology Adoption: The mention of increased usage of point-of-sale devices indicates a trend towards modernizing revenue collection methods. This adoption of technology not only enhances efficiency in revenue collection but also signifies a level of technological advancement within the economy.
4. Policy Implications: For policymakers, this data underscores the importance of targeted economic policies and investments. Zones with lower revenue collections may require focused interventions to stimulate economic growth, improve infrastructure, and support local businesses.
5. Overall Economic Health: Achieving 76.8% of the revenue target suggests a robust economic performance but also indicates areas for potential improvement in revenue mobilization strategies. This balance between achievement and potential growth areas is crucial for sustaining economic development.

National Parks

The tourism sector in Tanzania saw a significant boost in the number of visitors and earnings from national parks:

• Number of Visitors: Increased by 56% to 619,184 visitors.
• Earnings: Increased by 37.5% to TZS 149.0 billion.

This performance improvement can be attributed to both government and private sector initiatives to promote tourism activities. The Northern zone accounted for the majority of visitors and earnings, with the following shares:

• Northern Zone:
  • Number of Visitors: 72.1%
  • Earnings: 71.2%

Museums

The museums also experienced growth in visitor numbers and earnings, particularly in the quarter ending March 2024. Here are the details:

• Number of Visitors: Increased by 34.2% to 21,101 visitors compared to the corresponding quarter in 2023.
• Earnings: Grew by 42.3% to TZS 203.4 million.

Dar es Salaam zone continued to dominate in both the number of visitors and earnings:

• Dar es Salaam Zone:
  • Number of Visitors: 77.4%
  • Earnings: 86.2%

Table 1: Earnings and Number of Visitors to National Parks

Unfortunately, Table 3.9 was not provided, but from the context, it is evident that the Northern zone played a critical role in tourism revenue.

Table 1: Earnings and Number of Visitors to Museums

Hence

• The number of visitors to national parks and museums in Tanzania has significantly increased.
• Earnings from tourism activities in these areas have also grown, showcasing the positive impact of promotional efforts.
• The Northern zone and Dar es Salaam zone are the primary contributors to tourism revenues in national parks and museums, respectively.

Implications for Tanzania's Economic Development

The increase in tourism activities, both in terms of visitors and earnings, signifies positive strides in Tanzania's economic development. The sector's growth supports various facets of the economy, including employment, regional development, infrastructure, and foreign exchange earnings, all contributing to a robust and diversified economic landscape. Continued focus on promoting tourism through strategic initiatives and investments will likely yield long-term economic benefits for Tanzania:

1. Economic Growth and Revenue Generation

The substantial growth in tourism contributes directly to the national economy by generating revenue. The increase in earnings from national parks (37.5% to TZS 149.0 billion) and museums (42.3% to TZS 203.4 million) indicates a strong inflow of funds, which can be reinvested into further development projects across various sectors.

2. Employment Opportunities

Tourism is labor-intensive and supports a wide range of employment opportunities. The increased number of visitors likely leads to more jobs in hospitality, tour operations, transportation, and conservation efforts. This can help reduce unemployment rates and improve living standards for those working in these sectors.

3. Regional Development

The dominance of the Northern zone in national park tourism (72.1% of visitors and 71.2% of earnings) and the Dar es Salaam zone in museum visits (77.4% of visitors and 86.2% of earnings) suggests focused regional development. The benefits include improved infrastructure, better services, and increased investments in these regions, which can have a ripple effect on local economies.

4. Foreign Exchange Earnings

Tourism is a significant source of foreign exchange. The increase in international visitors boosts foreign currency reserves, which are vital for stabilizing the local currency and funding imports. This enhances Tanzania's balance of payments and economic stability.

5. Private Sector Growth

The improved performance attributed to both government and private sector initiatives highlights the importance of public-private partnerships. Encouraging private investments in tourism can lead to the development of new attractions, better facilities, and innovative services, fostering a competitive and dynamic economic environment.

6. Infrastructure Development

The growth in tourism necessitates improved infrastructure, such as transportation, communication, and hospitality facilities. Investments in these areas not only benefit tourists but also enhance the overall infrastructure, making it easier for businesses and individuals to operate, thereby boosting economic activities.

7. Cultural Preservation and Education

Museums play a critical role in preserving cultural heritage and educating the public. The increased number of visitors to museums signifies a growing interest in cultural and historical awareness. This can lead to better preservation efforts and educational programs, contributing to national identity and pride.

8. Diversification of the Economy

Reliance on multiple sectors, including tourism, helps diversify the economy and reduce dependence on agriculture or mining. A diversified economy is more resilient to shocks, such as commodity price fluctuations or adverse weather conditions, ensuring sustainable economic growth.

9. Sustainable Development

Promoting tourism, particularly eco-tourism in national parks, aligns with sustainable development goals. Conservation efforts funded by tourism revenue help preserve natural resources and biodiversity, ensuring that tourism growth does not come at the expense of environmental degradation.

Foreign Exchange Market in Tanzania

The foreign exchange market in Tanzania is integral to the country's monetary policy and economic stability:

Foreign Exchange Operations

• Bank of Tanzania's Interventions: The Bank of Tanzania actively intervenes in the interbank foreign exchange market (IFEM) to manage liquidity and stabilize the exchange rate. In the second quarter of 2024, the Bank of Tanzania sold USD 185 million to the market, compared to USD 131.5 million in the previous quarter.

Exchange Rate Movements

• Mainland Tanzania:
  • Depreciation: The Tanzania Shilling (TZS) depreciated by 2.2% against the US Dollar in the second quarter of 2024, which was a faster rate than the 1.8% depreciation in the first quarter.
  • Quarterly Average: The average exchange rate in the IFEM was TZS 2,375.5 per USD in June 2024, up from TZS 2,330.7 per USD in March 2024.
• Zanzibar:
  • Exchange Rate: The exchange rate also showed depreciation similar to the mainland, reflecting overall market trends and pressures.

Foreign Exchange Reserves

• Adequacy: Foreign exchange reserves remained adequate, standing at USD 5,239.3 million at the end of June 2024. This level of reserves covers more than 4.5 months of projected imports of goods and services, thus providing a buffer against external shocks.

Foreign Exchange Inflows and Outflows

• Tourism and Exports: Inflows increased from tourism, traditional exports like coffee and cashew nuts, and mineral exports, particularly gold.
• Outflows: Major outflows were due to the importation of goods and services necessary for economic activities.

Current Account Balance

• Deficit:
  • Mainland Tanzania: The current account deficit narrowed to USD 959.2 million in the quarter ending June 2024, compared to USD 977.8 million in the corresponding quarter in 2023.
  • Surplus:
    • Zanzibar: The current account surplus increased to USD 421.5 million in the year ending June 2024, from USD 411.5 million in the corresponding period in 2023.

Regulatory and Market Developments

• Market Reforms: The Bank of Tanzania is continuously implementing reforms to enhance the efficiency and transparency of the foreign exchange market. This includes measures to improve the regulatory framework and increase market liquidity.

The foreign exchange market in Tanzania plays a crucial role in maintaining economic stability. The Bank of Tanzania's interventions, adequate foreign exchange reserves, and continuous market reforms help manage the exchange rate and support the country's economic objectives.

Indicators of Economic Development

The foreign exchange market's performance, as reflected in these indicators, tells a positive story about Tanzania's economic development. While managing currency depreciation remains a challenge, the adequate foreign exchange reserves, increased inflows from key sectors, improved current account balance, and proactive regulatory reforms all point towards a stable and growing economy. These factors contribute to an environment conducive to sustainable economic development, attracting foreign investment, and enhancing the overall economic health of the country.

1. Currency Depreciation:
   • Depreciation Rate: The Tanzania Shilling (TZS) depreciated by 2.2% in the second quarter of 2024, compared to a 1.8% depreciation in the first quarter.
   • Impact: While depreciation can indicate economic challenges, it can also make exports cheaper and more competitive internationally. This mixed effect needs to be balanced carefully by the Bank of Tanzania to avoid inflationary pressures while promoting exports.
2. Foreign Exchange Reserves:
   • Reserves Adequacy: Foreign exchange reserves stood at USD 5,239.3 million, covering more than 4.5 months of imports.
   • Economic Stability: Adequate reserves signify economic stability and the ability to withstand external shocks. It also reflects prudent economic management and a buffer for future uncertainties.
3. Tourism and Export Inflows:
   • Increased Inflows: Significant inflows from tourism and traditional exports (like coffee and cashew nuts) and mineral exports (especially gold).
   • Economic Growth: These inflows are critical for foreign currency earnings, supporting the balance of payments and promoting sectors like agriculture, mining, and tourism, which are pivotal for economic development.
4. Current Account Balance:
   • Mainland Tanzania: The current account deficit narrowed to USD 959.2 million, indicating an improvement in the trade balance.
   • Zanzibar: The current account surplus increased to USD 421.5 million, highlighting positive economic activity and better trade performance.
   • Trade and Investment: These figures suggest an improving trade environment, attracting investment, and enhancing economic growth prospects.
5. Bank of Tanzania's Interventions:
   • Market Stability: Selling USD 185 million to stabilize the market shows active management of the foreign exchange environment.
   • Confidence: Such interventions help in maintaining market confidence and ensuring liquidity, essential for economic stability and growth.
6. Regulatory Reforms:
   • Market Efficiency: Continuous reforms aimed at enhancing the regulatory framework and improving market liquidity are indicative of a proactive approach to fostering a robust economic environment.
   • Economic Development: Effective regulatory frameworks encourage investment, enhance transparency, and contribute to a more resilient and dynamic economy.

Soko la Fedha za Kigeni Tanzania

Soko la fedha za kigeni Tanzania ni sehemu muhimu ya sera ya fedha ya nchi na utulivu wa kiuchumi:

Shughuli za Fedha

• Muingilio wa Benki Kuu ya Tanzania: Benki Kuu ya Tanzania huingilia kati kwa ufanisi katika soko la fedha za kigeni la benki kati (IFEM) kusimamia ukwasi na kuimarisha kiwango cha kubadilisha fedha. Katika robo ya pili ya mwaka 2024, Benki Kuu ya Tanzania iliuza TZS milioni 185 kwa soko, ikilinganishwa na TZS milioni 131.5 katika robo iliyopita.

Mabadiliko ya Viwango vya Kubadilisha Fedha

• Tanzania Bara:
  • Kushuka kwa Thamani: Shilingi ya Tanzania (TZS) ilishuka kwa thamani kwa 2.2% dhidi ya Dola ya Marekani katika robo ya pili ya mwaka 2024, kiwango kilicho kasi zaidi kuliko kushuka kwa 1.8% katika robo ya kwanza.
  • Wastani wa Robo: Wastani wa kiwango cha kubadilisha fedha katika IFEM ulikuwa TZS 2,375.5 kwa TZS kwa Dola ya Marekani mnamo Juni 2024, kutoka TZS 2,330.7 kwa TZS kwa Dola ya Marekani mnamo Machi 2024.
• Zanzibar:
  • Kiwango cha Kubadilisha Fedha: Kiwango cha kubadilisha fedha pia kilionyesha kushuka kwa thamani sawa na Tanzania Bara, ikiakisi mwelekeo na shinikizo za soko kwa ujumla.

Akiba ya Fedha za Kigeni

• Utoaji wa Akiba: Akiba ya fedha za kigeni ilibaki kuwa ya kutosha, ikiwa na TZS milioni 5,239.3 mwishoni mwa Juni 2024. Kiwango hiki cha akiba kinatosha kufunika zaidi ya miezi 4.5 ya uagizaji bidhaa na huduma, hivyo kutoa kinga dhidi ya misukosuko ya nje.

Mapato na Matumizi ya Fedha za Kigeni

• Utalii na Mauzo ya Nje: Mapato yaliongezeka kutoka utalii, mauzo ya nje ya jadi kama kahawa na korosho, na mauzo ya madini, hasa dhahabu.
• Matumizi: Matumizi makubwa yalitokana na uagizaji wa bidhaa na huduma muhimu kwa shughuli za kiuchumi.

Mizania ya Akaunti ya Hivi Sasa

• Upungufu:
  • Tanzania Bara: Upungufu wa akaunti ya sasa ulipungua hadi TZS milioni 959.2 katika robo iliyoishia Juni 2024, ikilinganishwa na TZS milioni 977.8 katika robo inayofanana ya mwaka 2023.
• Ziada:
  • Zanzibar: Ziada ya akaunti ya sasa iliongezeka hadi TZS milioni 421.5 katika mwaka ulioishia Juni 2024, kutoka TZS milioni 411.5 katika kipindi kinachofanana cha mwaka 2023.

Maendeleo ya Kisheria na Soko

• Maboresho ya Soko: Benki Kuu ya Tanzania inaendelea kutekeleza maboresho ili kuongeza ufanisi na uwazi wa soko la fedha za kigeni. Hii inajumuisha hatua za kuboresha mfumo wa udhibiti na kuongeza ukwasi wa soko.

Soko la fedha za kigeni Tanzania lina jukumu muhimu katika kudumisha utulivu wa kiuchumi. Muingilio wa Benki Kuu ya Tanzania, akiba ya kutosha ya fedha za kigeni, na maboresho endelevu ya soko husaidia kudhibiti kiwango cha kubadilisha fedha na kusaidia malengo ya kiuchumi ya nchi.

Viashiria vya Maendeleo ya Kiuchumi

Utendaji wa soko la fedha za kigeni, kama unavyoonyeshwa na viashiria hivi, unaonyesha hadithi nzuri kuhusu maendeleo ya kiuchumi ya Tanzania. Wakati kudhibiti kushuka kwa thamani ya sarafu kunabaki kuwa changamoto, akiba ya kutosha ya fedha za kigeni, ongezeko la mapato kutoka sekta muhimu, maboresho katika mizania ya akaunti ya sasa, na maboresho ya kisheria yanayofanywa yanaonyesha uchumi imara na unaokua. Vipengele hivi vinachangia mazingira yanayowezesha maendeleo endelevu ya kiuchumi, kuvutia uwekezaji wa kigeni, na kuimarisha afya ya kiuchumi ya nchi kwa ujumla.

1. Kushuka kwa Thamani ya Sarafu:

• Kiwango cha Kushuka: Shilingi ya Tanzania (TZS) ilishuka kwa thamani kwa 2.2% katika robo ya pili ya mwaka 2024, ikilinganishwa na kushuka kwa 1.8% katika robo ya kwanza.
  • Athari: Ingawa kushuka kwa thamani kunaweza kuonyesha changamoto za kiuchumi, pia kunaweza kufanya mauzo ya nje kuwa nafuu na yenye ushindani kimataifa. Athari hizi mchanganyiko zinahitaji kusimamiwa kwa uangalifu na Benki Kuu ya Tanzania ili kuepuka shinikizo la mfumuko wa bei wakati wa kukuza mauzo ya nje.

Akiba ya Fedha za Kigeni:

• Utoaji wa Akiba: Akiba ya fedha za kigeni ilifikia TZS milioni 5,239.3, ikitosha kufunika zaidi ya miezi 4.5 ya uagizaji bidhaa.
  • Utulivu wa Kiuchumi: Akiba ya kutosha inaashiria utulivu wa kiuchumi na uwezo wa kukabiliana na misukosuko ya nje. Pia inaonyesha usimamizi wa busara wa kiuchumi na kinga kwa ajili ya kutokuwa na uhakika wa siku zijazo.

Mapato kutoka Utalii na Mauzo ya Nje:

• Ongezeko la Mapato: Mapato makubwa kutoka utalii na mauzo ya nje ya jadi (kama kahawa na korosho) na mauzo ya madini (hasa dhahabu).
  • Ukuaji wa Kiuchumi: Mapato haya ni muhimu kwa mapato ya fedha za kigeni, kusaidia mizania ya malipo na kukuza sekta kama kilimo, madini, na utalii, ambazo ni muhimu kwa maendeleo ya kiuchumi.

Mizania ya Akaunti ya Hivi Sasa:

• Tanzania Bara: Upungufu wa akaunti ya sasa ulipungua hadi TZS milioni 959.2, ikionyesha kuboreshwa kwa mizania ya biashara.
• Zanzibar: Ziada ya akaunti ya sasa iliongezeka hadi TZS milioni 421.5, ikiashiria shughuli za kiuchumi chanya na utendaji bora wa biashara.
  • Biashara na Uwekezaji: Takwimu hizi zinaonyesha mazingira yanayoboreshwa ya biashara, kuvutia uwekezaji, na kuongeza matarajio ya ukuaji wa kiuchumi.

Muingilio wa Benki Kuu ya Tanzania:

• Utulivu wa Soko: Kuuza TZS milioni 185 ili kuimarisha soko kunaonyesha usimamizi wa kazi wa mazingira ya fedha za kigeni.
  • Imani: Muingilio huu husaidia kudumisha imani ya soko na kuhakikisha ukwasi, muhimu kwa utulivu wa kiuchumi na ukuaji.

Maboresho ya Kisheria:

• Ufanisi wa Soko: Maboresho endelevu yanayolenga kuboresha mfumo wa udhibiti na kuongeza ukwasi wa soko yanaonyesha njia ya makusudi ya kukuza mazingira ya kiuchumi yenye nguvu.
  • Maendeleo ya Kiuchumi: Mifumo madhubuti ya udhibiti inahimiza uwekezaji, kuongeza uwazi, na kuchangia uchumi imara na unaobadilika.

Overview of Tanzania's Monetary Policy

The Bank of Tanzania's primary goal in monetary policy is to maintain price stability and support economic growth. The current monetary policy framework involves several key elements:

1. Policy Rate: The central bank rate (policy rate) was maintained at 6% for the quarter ending September 2024. This decision aligns with the goal to keep inflation below the target of 5%.
2. Inflation:
   • Mainland Tanzania: Inflation remained low at 3-4% over the past year. In April and May 2024, it was recorded at 3% and 3.1% respectively.
   • Zanzibar: Inflation declined to the medium target of 5%.
3. GDP Growth:
   • Mainland Tanzania: Real GDP growth was 5.1% in 2023, up from 4.7% in 2022. The growth was driven by sectors such as agriculture, mining, quarrying, construction, and financial intermediation. The first and second quarters of 2024 showed strong growth at 5% and 5.4% respectively.
   • Zanzibar: The economy grew by 7.4% in 2023, compared to 6.8% in 2022, mainly driven by tourism-related activities, construction, and real estate.
4. Private Sector Credit Growth: Estimated at 16.4% during the second quarter of 2024, compared with 17.1% in the preceding quarter. The banking sector remained liquid, profitable, and well-capitalized, with an improved asset quality as reflected by a lower Non-Performing Loan (NPL) ratio of 4.4% in May 2024.
5. Current Account:
   • The current account deficit narrowed to USD 959.2 million in the quarter ending June 2024, from USD 977.8 million in the corresponding quarter in 2023.
   • In Zanzibar, the current account surplus increased to USD 421.5 million in the year ending June 2024, compared to USD 411.5 million in the corresponding period in 2023.
6. Foreign Exchange Reserves: Remained adequate, above USD 5 billion at the end of June 2024, covering more than 4 months of projected imports. The foreign currency liquidity improved due to increased inflows from tourism, gold, and traditional exports.
7. Exchange Rate: The exchange rate depreciated by around 2.2% in the quarter, faster than the 1.8% depreciation in the first quarter of 2024. In the retail market, the depreciation rate was around 3.2% for the quarter.

Instruments and Implementation

The Bank of Tanzania uses various monetary policy instruments, including:

• Repurchase Agreements (Repo and Reverse Repo)
• 35-day and 91-day Treasury Bills
• Statutory Minimum Reserve Requirement Ratio (SMR)
• Sale or Purchase of Foreign Currency in the Interbank Foreign Exchange Market
• Standing Lending Facilities (Intraday and Lombard Loan Windows)

These instruments help to align the operating target variable (7-day interbank interest rate) along the policy rate. The implementation is characterized by high transparency, with regular communication of MPC decisions to banks and the public.

The monetary policy implementation during April-June 2024 was deemed successful, with the 7-day interbank rate staying within +/- 200 basis points of the policy rate and showing improvement compared to the preceding quarter.

The bank also aims to improve the money market through reforms such as the ‘Frontclear’ umbrella guarantee facility, reviewing the collateral framework for government securities, the regulatory framework for liquid assets eligibility, and the pricing framework for monetary policy instruments.