In September 2024, Tanzania’s national debt reached USD 45.05 billion, with 73% held in external debt, underscoring the country’s reliance on foreign financing for development. This external debt, totaling USD 32.89 billion, exposes Tanzania to risks from global economic shifts, such as rising interest rates and currency fluctuations. The domestic debt, focused on long-term government securities, reflects a cautious approach to managing short-term financial pressures. As Tanzania strives to balance its funding needs with sustainable debt levels, a diversified financial strategy will be essential to maintain resilience and support continued economic growth.

1. Debt Composition:
   • External Debt: Comprises 73% of the total debt, equating to approximately USD 32.89 billion. This reliance on foreign financing highlights Tanzania's exposure to external economic conditions, currency fluctuations, and interest rates.
   • Domestic Debt: Accounts for the remaining 27%, around TZS 32.6 trillion (roughly USD 12.16 billion). The domestic debt primarily includes long-term government securities such as Treasury bonds, which constituted 78.9% of the domestic debt portfolio.
2. Debt Growth:
   • External debt grew by 0.6% in September, driven by additional external loans primarily for government projects. This slight growth shows moderate increases in borrowing, indicating a cautious approach amid rising global borrowing costs.
   • Domestic debt, in contrast, saw a reduction in short-term instruments like Treasury bills, aligning with a strategy to keep interest expenses in check by favoring longer-term, lower-risk instruments.
3. Debt Servicing and Risks:
   • External Debt Service: In September, the government serviced USD 105.4 million in external debt, including USD 45.9 million for principal repayment and USD 59.5 million for interest. These payments indicate ongoing debt obligations that can strain foreign reserves if external conditions tighten or export earnings decline.
   • Domestic Debt Management: By focusing on long-term securities, the government aims to minimize rollover risks and ensure more predictable repayment schedules. This reduces the potential impact of short-term interest rate volatility.
4. Implications of High External Debt:
   • A high proportion of external debt can expose Tanzania to global economic shifts, such as rising interest rates or currency depreciation, which could make debt repayments more expensive in local currency terms.
   • The substantial external debt load could also limit Tanzania’s ability to borrow further for development if global financial conditions worsen, underscoring the need for diversified funding sources.

In summary, Tanzania’s debt management strategy involves controlled domestic borrowing and careful external debt expansion, yet the high reliance on foreign debt remains a vulnerability. Prudent management of this debt mix will be essential to maintain economic resilience and avoid financial constraints.

Tanzania’s debt profile, with the national debt at USD 45.05 billion and external debt accounting for 73% of this, provides insights into the country’s fiscal strategy and potential risks:

1. Reliance on Foreign Financing:
   • The high proportion of external debt (USD 32.89 billion) reveals Tanzania’s significant reliance on international funding for development and fiscal needs. While this allows the government to fund large-scale projects, it exposes the country to external risks like currency fluctuations and rising global interest rates, which can increase debt servicing costs in the future.
2. Debt Servicing and Foreign Reserve Pressure:
   • With over USD 105 million in debt servicing obligations in a single month, Tanzania must allocate foreign reserves to cover these repayments. If export earnings decline or global financing conditions tighten, maintaining these payments could become challenging, potentially impacting reserves and currency stability.
3. Balanced Approach in Domestic Borrowing:
   • Tanzania’s focus on long-term Treasury bonds for domestic debt (78.9% of domestic debt) reflects a prudent strategy, reducing the need for frequent rollovers and lowering short-term interest rate risks. This approach helps manage cash flow predictably and minimizes immediate repayment pressures, providing a level of financial stability.
4. Implications for Fiscal Flexibility:
   • While Tanzania’s controlled domestic debt growth is financially sound, the high external debt limits fiscal flexibility. In a global downturn, the country could face challenges in accessing affordable funding or may need to divert resources from domestic priorities to service external debt.
5. Need for Diversification:
   • The reliance on foreign debt emphasizes the importance of diversifying funding sources. Increasing domestic revenue, promoting foreign direct investment, or expanding export earnings could provide a buffer, reducing dependency on external loans.

In essence, while Tanzania is managing its debt prudently, particularly on the domestic front, the high reliance on external debt poses a risk if global conditions worsen. Ensuring a balance between funding needs and sustainable debt levels will be crucial for long-term fiscal health and economic stability.

In August 2024, Tanzania's government achieved 98.8% of its revenue target, collecting TZS 2,539.3 billion from tax and non-tax sources, showcasing effective fiscal management and collection efficiency. Major tax categories exceeded targets, boosting revenue, while non-tax income diversified the government’s funding base. Despite this strong revenue performance, government spending reached TZS 3,219.8 billion, creating a budget deficit that underscores Tanzania’s need for prudent debt management. The month’s figures reflect a balanced approach, emphasizing essential services and development while highlighting the ongoing challenge of funding growth without over-relying on debt.

1. Government Revenue:
   • Total government revenue, including collections from local government authorities, reached TZS 2,539.3 billion, which is 98.8% of the targeted amount for the month. This achievement highlights effective tax compliance and collection efficiency.
   • Tax Revenue: Contributed TZS 2,064.8 billion to the overall revenue. This strong tax performance was attributed to improved tax administration and compliance, with most major tax categories (except income tax) exceeding their targets.
   • Non-Tax Revenue: Added TZS 380.9 billion, further supporting the revenue base and reflecting diversified income sources beyond direct taxation.
2. Government Spending:
   • Total expenditure for August 2024 was TZS 3,219.8 billion, exceeding revenue and creating a budget deficit. Spending was directed as follows:
     • Recurrent Expenditure: TZS 1,945.6 billion was allocated for wages, salaries, and operational costs. This represents essential, ongoing commitments by the government.
     • Development Expenditure: TZS 1,274.2 billion was invested in development projects, indicating a commitment to infrastructure and other capital projects that support long-term growth.
3. Budget Deficit and Borrowing:
   • The spending surplus over revenue indicates a budget deficit, pointing to the government’s reliance on borrowing to bridge this gap. The deficit emphasizes the importance of fiscal consolidation efforts to manage debt while funding essential services and development goals.

In summary, Tanzania’s near-target revenue collection and essential spending allocations demonstrate strong fiscal management, though the budget deficit highlights ongoing challenges in balancing development spending with revenue constraints.

The August 2024 government revenue and spending figures with both positive fiscal management efforts and the challenges facing Tanzania's budget:

1. Strong Revenue Performance:
   • Achieving 98.8% of the revenue target, including strong tax and non-tax contributions, reflects effective tax administration and compliance. This efficiency is a positive sign for fiscal stability, as it shows the government’s ability to mobilize resources to fund its obligations without heavy reliance on external borrowing.
2. Commitment to Essential Services and Development:
   • With recurrent spending focused on wages and essential operations, the government prioritizes stability in public services and support for day-to-day operations.
   • High development expenditure of TZS 1,274.2 billion indicates a commitment to infrastructure and long-term growth. Investing in these areas is critical for economic development, creating jobs, and improving overall productivity, which can boost future revenue.
3. Challenges of the Budget Deficit:
   • The budget deficit, resulting from spending surpassing revenue, implies that the government is currently spending more than it earns, leading to a reliance on borrowing. If such deficits continue, they could increase Tanzania’s debt burden, impacting future fiscal space for development spending or emergency responses.
4. Balanced Fiscal Approach:
   • The focus on fiscal consolidation—prioritizing essential spending and managing debt carefully—suggests the government is trying to balance immediate needs with long-term financial sustainability. However, sustained budget deficits may eventually pressure the government to reduce spending or increase taxes, which could impact economic growth or public service quality.

In summary, while Tanzania shows positive revenue performance and a strategic approach to spending, the budget deficit highlights the need for continued fiscal discipline. Balancing development goals with financial stability will be key to maintaining economic resilience and reducing reliance on debt.

In October 2024, Tanzania’s financial markets exhibited mixed dynamics across Treasury securities and the foreign exchange landscape, reflecting broader economic pressures and investor caution. Treasury bill yields rose to 10.85% in September, signaling attractive short-term returns amid heightened government demand, while long-term bond yields also climbed as investors sought higher returns to offset inflationary pressures. Concurrently, the Tanzanian Shilling experienced a 10.1% year-on-year depreciation, with modest stabilization efforts by the Bank of Tanzania. This backdrop of rising borrowing costs, currency pressures, and active foreign exchange trading highlights the delicate balance between government financing needs, currency stability, and investor expectations.

1. Treasury Securities:
   • Treasury Bills: The weighted average yield (WAY) for Treasury bills increased to 10.85% in September 2024, up from 10.61% in the previous month. This rise indicates stronger returns for investors, potentially reflecting higher government demand for short-term funds.
   • Government Bonds: The Bank of Tanzania conducted auctions for long-term government bonds (15-, 20-, and 25-year bonds) with a tender size of TZS 574.9 billion. Bids reached TZS 674.8 billion, of which TZS 520.3 billion were successful. The yields to maturity for these bonds also rose, reaching 15.35%, 15.45%, and 15.42%, respectively. This increase suggests that investors demand higher returns, possibly in response to inflationary pressures and interest rate adjustments.
2. Foreign Exchange:
   • Exchange Rate: The Tanzanian Shilling showed a year-on-year depreciation of 10.1%, trading at an average of TZS 2,727 per USD in September 2024, compared to approximately TZS 2,694 per USD the previous month. This depreciation reflects continued foreign currency demand pressures, though the rate of devaluation stabilized slightly compared to the previous year.
   • Interbank Foreign Exchange Market (IFEM): Transactions in the IFEM totaled USD 8.35 million in September 2024, an increase from USD 4.61 million in August. The Bank of Tanzania reduced its net market participation to a net sale of USD 0.75 million, down from USD 1 million in August, suggesting a cautious approach to stabilizing the Shilling amidst currency pressures.

The recent trends in Tanzania's financial markets indicate a few key economic conditions:

1. Increased Borrowing Costs and Investor Caution:
   • The rising yields on Treasury securities, particularly the increase in the Treasury bill yield to 10.85% and higher yields on long-term bonds (up to 15.45%), suggest that investors are demanding more return on government debt. This is likely due to rising inflationary expectations and perceived risks, as well as the government’s increased reliance on domestic borrowing.
   • Higher yields mean the government is paying more to finance its debt, which could strain fiscal resources if borrowing costs continue to rise. For investors, however, this environment offers more attractive returns, especially in a low-risk investment.
2. Currency Pressure and Import Costs:
   • The 10.1% depreciation of the Tanzanian Shilling year-on-year underscores ongoing pressure on the foreign exchange market. A weaker Shilling makes imports more expensive, which can increase costs for businesses reliant on imported goods or raw materials and may eventually feed into consumer prices.
   • Despite Bank of Tanzania interventions in the foreign exchange market, the Shilling has continued to weaken, reflecting structural imbalances in the demand and supply of foreign currency. Increased IFEM transactions indicate active currency trading, yet the reduction in central bank participation suggests a cautious approach to direct intervention.
3. Investment Appeal in Government Securities:
   • The attractive yields on Treasury bills and bonds may draw in more domestic and international investors, helping the government finance projects and obligations. However, if yields remain high, the government may face higher long-term debt servicing costs.
4. Economic Signals for the Broader Market:
   • These financial market dynamics signal caution within the Tanzanian economy, balancing the need to attract investment and manage currency stability while addressing inflationary risks. If borrowing costs and currency pressures remain high, this could impact Tanzania’s fiscal space, import costs, and overall growth prospects, particularly if global financial conditions tighten further.

In summary, Tanzania’s financial markets reflect a cautious economic climate where the government must balance financing needs, currency stability, and investor expectations amidst external pressures.

The Tanzania Shilling has faced a steady depreciation, recording a 10.1% decline year-on-year as of September 2024, with the average exchange rate reaching TZS 2,727 per USD. This shift reflects both local and global financial pressures, including heightened demand for foreign currency and increasing import costs. Although the Bank of Tanzania has minimized its market interventions, foreign reserves remain robust, covering 4.4 months of imports. These reserves offer a financial cushion, helping Tanzania navigate currency volatility and maintain economic stability amid external shocks and inflation risks.

1. Depreciation Rate: As of September 2024, the Tanzania Shilling depreciated by 10.1% year-on-year, with the average exchange rate reaching TZS 2,727 per USD compared to TZS 2,694 per USD in the previous month. This steady depreciation marks a continued downward trend in the currency's valuereign Exchange Market (IFEM) Transactions**:
   • In September 2024, transactions in the Interbank Foreign Exchange Market (IFEM) increased to USD 8.35 million, up from USD 4.61 million in August. The Bank of Tanzania reduced its net sales in the IFEM to USD 0.75 million, down from USD 1 million in August. This reduced intervention suggests a cautious approach to managing currency supply in the market amid ongoing depreciation.
2. Import Coverage: Despite the depreciation, Tanzania’s foreign exchange reserves remain sufficient, amounting to USD 5,413.6 million by the end of September 2024, enough to cover approximately 4.4 months of imports. This buffer provides a level of economic stability and acts as a safeguard against further currency volatility.

This depreciation external pressures on the Tanzania Shilling, likely stemming from high demand for USD, global economic conditions, and local market dynamics. Despite the decline, Tanzania’s substantial foreign reserves offer a degree of resilience to absorb future external shocks.

The depreciation of the Tanzania Shilling indicates key economic signals:

1. External Pressure on Imports and Costs:
   • The Shilling’s 10.1% depreciation year-on-year implies that imports have become more expensive in Tanzania, which could drive up costs for goods reliant on foreign inputs, such as fuel, machinery, and consumer products. This can potentially increase inflationary pressures on the domestic market, as businesses may pass on higher import costs to consumers.
2. Increased Demand for Foreign Currency:
   • The rise in foreign exchange transactions in the Interbank Foreign Exchange Market (IFEM) to USD 8.35 million from USD 4.61 million in August indicates heightened demand for foreign currency. This demand likely stems from increased imports and dollar-denominated debt payments, placing pressure on the Shilling as more businesses and government entities seek to secure USD.
3. Cautious Central Bank Intervention:
   • The Bank of Tanzania's reduced participation in the foreign exchange market—down to USD 0.75 million in net sales—suggests a careful approach to currency stabilization. By not heavily intervening, the central bank may be preserving its foreign reserves to avoid rapid depletion, especially given the uncertainty in global markets. This cautious intervention reflects a balance between managing the currency’s value and maintaining adequate reserve levels.
4. Resilience through Foreign Reserves:
   • Tanzania’s foreign reserves, covering 4.4 months of imports, offer a level of financial stability. This reserve cushion can protect the economy from sudden shocks, such as volatility in global commodity prices or external funding pressures, though sustained currency depreciation could gradually erode this buffer if not managed carefully.
5. Investment and Inflation Impact:
   • Depreciation can have a mixed effect on foreign investment. While a weaker currency may make Tanzania assets cheaper for foreign investors, it also signals currency risk, which could deter long-term investments. Additionally, if depreciation persists, inflation could rise, leading to tighter monetary policies that further impact borrowing costs.

In summary, the Tanzania Shilling’s depreciation reflects structural challenges in balancing foreign currency supply and demand, managing inflation risks, and maintaining investor confidence. The central bank’s cautious stance underscores the need for a sustainable approach to currency management, aiming to support economic stability amidst external and internal pressures.

In the fiscal year 2023/24, Tanzania successfully maintained its inflation rate within the national medium-term target of 3-5%, averaging 3.1%, a decrease from 4.6% in the previous year. However, regional disparities were evident: the Dar es Salaam Zone recorded the highest inflation at 5.4%, driven by rising non-food prices in categories such as housing and transport, while the Lake Zone enjoyed the lowest rate at 1.2%, reflecting the benefits of good harvests that reduced food prices significantly. Other regions displayed varying inflation levels, with the Northern Zone at 3.6%, the Central Zone at 2.5%, the South Eastern Zone at 2.4%, and the Southern Highlands Zone at 3.7%. This regional data underscores the critical role of agricultural performance in inflation control and highlights the need for targeted interventions in urban areas like Dar es Salaam to manage rising living costs effectively.

1. National Inflation:
   • Overall national inflation averaged 3.1% in 2023/24, a decrease from 4.6% in the previous year (2022/23).
2. Regional Inflation Rates:
   • Dar es Salaam Zone: Registered the highest inflation at 5.4%, up from 4.0% the previous year. This increase was driven by higher prices of non-food items, including clothing, footwear, housing, transport, and accommodation services.
   • Lake Zone: Experienced the lowest inflation rate of 1.2%, significantly down from 5.0% in 2022/23. This decrease was mainly due to lower food prices following good harvests.
   • Northern Zone: Inflation was 3.6%, slightly lower than the previous year’s 4.5%.
   • Central Zone: Recorded an inflation rate of 2.5%, down from 5.0% in 2022/23.
   • South Eastern Zone: Inflation eased to 2.4%, from 3.8% in 2022/23.
   • Southern Highlands Zone: Inflation was 3.7%, down from 5.0% the previous year.
3. Factors Influencing Inflation:
   • Decrease in Food Prices: Good harvests in the 2022/23 crop season led to reduced food prices in most zones, helping lower inflation rates.
   • Non-Food Price Increases: In Dar es Salaam, inflation pressures were higher due to rising costs in non-food categories, such as housing and transport.

The regional inflation from 2023/24 with insights about Tanzania’s economic dynamics:

1. Food Security and Inflation Control:
   • Lower inflation rates in most regions, particularly the Lake Zone (1.2%), indicate the positive impact of good harvests on food prices. This suggests that agriculture continues to play a central role in controlling inflation, as food prices significantly influence overall inflation rates in Tanzania.
2. Cost of Living Disparities:
   • Higher inflation in Dar es Salaam (5.4%) points to the growing cost of living in urban areas, where demand for non-food items—such as housing, transport, and services—is more pronounced. This urban inflation pressure suggests that Tanzania’s cities, especially Dar es Salaam, may require targeted interventions to stabilize costs in these sectors.
3. Dependence on Agriculture:
   • The decline in inflation in regions with strong agricultural production underscores the dependence of inflation control on agriculture. Tanzania’s reliance on food production for inflation management makes the economy sensitive to agricultural output and, by extension, climate variability. This highlights a need for diversification to reduce this vulnerability.
4. Challenges in Managing Non-Food Inflation:
   • Despite national inflation targets being met, the rise in non-food prices, particularly in Dar es Salaam, reflects challenges in areas like housing and transportation. Addressing these could involve infrastructure investments, better urban planning, and policies to stabilize these costs.
5. Uneven Economic Pressures:
   • The disparity in inflation rates across zones highlights uneven economic pressures and varying needs. While rural areas benefit from stable or falling food prices, urban areas face rising living costs, suggesting that policies may need to address regional inflation drivers more specifically.

Tanzania has witnessed remarkable growth in tax revenues from 1996/97 to 2023/24, with total revenue increasing significantly across all major tax categories. For instance, Pay As You Earn (P.A.Y.E.) surged from 38.4 billion TShs to 3.32 trillion TShs, marking an astounding 8,558% growth and a consistent 20% annual growth rate. Similarly, Domestic VAT revenue soared from 67.1 billion TShs to 3.85 trillion TShs, reflecting a 5,635% increase with a steady 20% annual growth rate. Looking ahead to 2030, projections indicate that P.A.Y.E. could exceed 9.91 trillion TShs, while Domestic VAT may reach 11.48 trillion TShs, signaling a strong trajectory for Tanzania’s tax revenue and economic expansion.

Detailed Breakdown of Tax Items

1. P.A.Y.E. (Pay As You Earn)
   • 1996/97: 38,357.8 Million TShs
   • 2023/24: 3,320,646.9 Million TShs
   • Total Growth: 8,558%
     • This indicates an astronomical increase, highlighting the success of revenue collection efforts and the growth of the formal employment sector.
   • Average Annual Growth Rate: 20%
     • A consistent growth rate that reflects robust economic performance and improved taxpayer compliance.
   • Forecast for 2030: 9,915,398.5 Million TShs
     • This projection suggests that as employment continues to grow, P.A.Y.E. will significantly contribute to total tax revenue.
2. Corporation Tax
   • 1996/97: 54,689.7 Million TShs
   • 2023/24: 3,574,291.1 Million TShs
   • Total Growth: 6,433%
     • This growth indicates enhanced corporate profitability and compliance with tax regulations.
   • Average Annual Growth Rate: 18%
     • A steady increase that signifies the expansion of the business environment in Tanzania.
   • Forecast for 2030: 9,648,992.4 Million TShs
     • The forecast anticipates that corporate income will continue to rise, further boosting tax revenues.
3. Individual Income Tax
   • 1996/97: 9,117.9 Million TShs
   • 2023/24: 284,795.6 Million TShs
   • Total Growth: 3,023%
     • Indicates significant growth in individual earnings and the effectiveness of tax collection mechanisms.
   • Average Annual Growth Rate: 16%
     • Reflects steady increases in individual income and compliance.
   • Forecast for 2030: 693,874.9 Million TShs
     • Projected growth suggests improvements in income levels across the population.
4. Other Income Taxes
   • 1996/97: 23,442.3 Million TShs
   • 2023/24: 2,337,045.5 Million TShs
   • Total Growth: 9,870%
     • Indicates broadening of the tax base and increased revenue from various sources.
   • Average Annual Growth Rate: 19%
     • Consistent growth suggests effective tax policy implementation.
   • Forecast for 2030: 6,636,650.3 Million TShs
     • Expected growth points to ongoing improvements in revenue collection.
5. Domestic Excise Duty
   • 1996/97: 61,923.3 Million TShs
   • 2023/24: 1,974,229.0 Million TShs
   • Total Growth: 3,088%
     • Reflects increased consumption of excise goods.
   • Average Annual Growth Rate: 15%
     • Suggests consistent consumption growth and tax compliance.
   • Forecast for 2030: 4,566,511.6 Million TShs
     • Future projections suggest continued revenue growth from excise duties.
6. Domestic VAT (Value Added Tax)
   • 1996/97: 67,053.2 Million TShs
   • 2023/24: 3,845,345.9 Million TShs
   • Total Growth: 5,635%
     • Highlights substantial growth in consumption and services subject to VAT.
   • Average Annual Growth Rate: 20%
     • Indicates strong consumer spending and tax compliance.
   • Forecast for 2030: 11,482,141.3 Million TShs
     • Expected significant growth as consumer spending increases.
7. Import Duty
   • 1996/97: 77,910.5 Million TShs
   • 2023/24: 1,845,087.5 Million TShs
   • Total Growth: 2,268%
     • Indicates increased imports and revenue generation from customs duties.
   • Average Annual Growth Rate: 13%
     • Suggests steady import growth.
   • Forecast for 2030: 3,841,383.2 Million TShs
     • Future increases expected as trade activities grow.
8. Excise Duty on Imports
   • 1996/97: 29,760.1 Million TShs
   • 2023/24: 1,533,699.0 Million TShs
   • Total Growth: 5,053%
     • Reflects growth in imported goods subject to excise duties.
   • Average Annual Growth Rate: 17%
     • Indicates growing reliance on imported products.
   • Forecast for 2030: 3,934,189.8 Million TShs
     • Projections suggest further increases in revenue from import excise duties.
9. VAT on Imports
   • 1996/97: 54,909.4 Million TShs
   • 2023/24: 3,748,862.6 Million TShs
   • Total Growth: 6,726%
     • Highlights substantial increases in imported goods and VAT revenue.
   • Average Annual Growth Rate: 18%
     • Reflects effective tax collection and growth in imports.
   • Forecast for 2030: 10,120,257.6 Million TShs
     • Future projections suggest a continued rise in VAT from imports.

Summary Analysis

• Substantial Growth Across All Categories: The data shows impressive growth rates across all tax categories, indicating Tanzania's success in expanding its tax base and improving compliance.
• Consistent Annual Growth Rates: Sustained growth rates in key areas like P.A.Y.E., Domestic VAT, and Corporation Tax reflect a dynamic economy with increasing formal employment and corporate activity.
• Positive Outlook to 2030: The forecasts indicate significant revenue increases across all tax categories, with P.A.Y.E. and Domestic VAT projected to exceed 9.9 trillion TShs and 11.4 trillion TShs, respectively, suggesting robust economic growth and increased formalization of the economy.

The growth rate and percentage increase for each tax item from 1996/97 to 2023/24 alongside the forecasted figures for 2030:

Analysis of the Table:

• Substantial Growth: The data illustrates that all tax categories have experienced impressive growth rates over the 27 years, demonstrating Tanzania's success in broadening its tax base.
• Consistent Average Annual Growth Rates: The average annual growth rates indicate sustained growth across various tax items, particularly in P.A.Y.E., Domestic VAT, and Corporation Tax, which reflect the country's economic expansion and improved compliance.
• Forecasted Growth to 2030: The forecast for 2030 shows that these trends are expected to continue, with significant increases in revenue for all tax items. The P.A.Y.E. is projected to exceed 9.9 trillion TShs, highlighting anticipated growth in formal employment and income levels.

Overall, these figures not only demonstrate the effectiveness of Tanzania's tax policies and administration over the past few decades but also indicate a positive economic outlook moving forward.

The fiscal year 2023/24 marked significant growth in Tanzania's financial sector, with bank deposits increasing by 17.7% to TZS 35,544.2 billion, largely due to enhanced public confidence and innovative financial products. The Dar es Salaam Zone dominated these deposits, holding 61.7% of the total, while the Northern Zone contributed TZS 4,327.2 billion, indicating a shift towards financial activity in other regions. Bank loans surged by 21.4% to TZS 32,089.5 billion, reflecting effective policies promoting credit access for key sectors such as trade, agriculture, and manufacturing, which accounted for 71% of the loan portfolio. Meanwhile, agent banking saw a remarkable 42.6% increase in the number of agents, totaling 120,324, facilitating greater financial inclusion, particularly in rural areas. This translated to substantial rises in transactions—cash deposits increased by 27.6% to TZS 26,485.9 billion, and withdrawals rose by 32% to TZS 14,659.4 billion—demonstrating a growing engagement with formal financial services across Tanzania.

1. Bank Deposits:
   • The total deposits mobilized by banks increased by 17.7%, reaching TZS 35,544.2 billion. This growth was attributed to efforts by banks and financial institutions to introduce innovative financial products and enhance public confidence in the banking sector.
   • Dar es Salaam Zone held the largest share of deposits at 61.7% (TZS 21,706.8 billion), reflecting its central role as an economic hub.
   • Other zones, such as the Northern Zone, saw a significant increase in deposits, reaching TZS 4,327.2 billion, which accounted for 12.5% of total deposits​.
2. Bank Loans:
   • The total loans extended by banks grew by 21.4% to reach TZS 32,089.5 billion. The Bank of Tanzania's policies to support private sector credit growth and financial inclusion contributed to this increase.
   • Lending was largely directed toward personal loans, trade, agriculture, and manufacturing, which collectively comprised 71% of the total loan portfolio​.
3. Agent Banking Operations:
   • The number of bank agents rose by 42.6% to 120,324 agents, enhancing financial accessibility, especially in rural areas.
   • Transactions via agent banking also grew, with cash deposit transactions increasing by 12% to 91.4 million transactions, and cash withdrawals rising by 14.5% to 52.6 million transactions.
   • The value of cash deposits and withdrawals reached TZS 26,485.9 billion and TZS 14,659.4 billion respectively, representing a 27.6% and 32% increase from the previous year​.

The financial sector data for Tanzania in 2023/24 with important insights into the country’s economic and financial landscape:

1. Increased Financial Inclusion:
   • The rise in agent banking operations and the significant increase in the number of agents (42.6%) reflect ongoing efforts to make financial services more accessible, especially in underserved and rural areas. The growth in agent transactions, with cash deposits and withdrawals up by 27.6% and 32% respectively, suggests that more Tanzanians are engaging with formal financial services, which supports the goal of financial inclusion.
2. Economic Confidence and Trust in Banking:
   • The increase in bank deposits by 17.7% (TZS 35,544.2 billion) indicates growing public confidence in the banking system. This growth could result from successful financial literacy programs, greater access to banks, and economic stability that encourages people to save within formal institutions. Dar es Salaam’s dominance in deposits (61.7%) highlights its role as the financial center of the country, though other regions, such as the Northern Zone, are also showing notable growth.
3. Support for Private Sector Growth:
   • The expansion in bank loans by 21.4% (TZS 32,089.5 billion) demonstrates that credit is becoming more accessible to individuals and businesses. Lending to sectors like trade, agriculture, and manufacturing suggests banks are playing an active role in supporting Tanzania’s economic sectors, fostering job creation, productivity, and economic diversification.
4. Agent Banking as a Bridge to Formal Finance:
   • The growth in agent banking shows that Tanzanians are increasingly using local agents as an entry point into the financial system, bridging the gap between traditional banking and underserved populations. This trend is essential for financial inclusion in regions where banks may not have a direct presence.
5. Regional Economic Disparities:
   • Dar es Salaam’s significant share of deposits highlights economic disparities, as it maintains its position as the financial hub. However, the Northern Zone’s increase in deposits signals potential economic growth in other areas, suggesting that financial activity is spreading to regions outside the capital.
6. Policy Success in Expanding Financial Services:
   • The overall growth in deposits, loans, and agent banking transactions reflects the effectiveness of the Bank of Tanzania’s policies aimed at financial inclusion and private sector support. These developments are critical for Tanzania’s broader economic goals, as access to credit and banking services can stimulate investment, consumption, and economic resilience.

Revenue collections for the fiscal year 2023/24

In the fiscal year 2023/24, Tanzania's Local Government Authorities (LGAs) achieved a remarkable revenue collection of TZS 1,132.1 billion, reaching 94.8% of their target. This performance reflects significant economic activity across different zones, with Dar es Salaam leading with TZS 277.3 billion, accounting for 24.5% of the total revenue. The Lake Zone followed closely, contributing TZS 237.0 billion (20.9%), driven by its robust agricultural and trading sectors. Meanwhile, the Southern Highlands, Northern, and South Eastern Zones collected TZS 182.3 billion (16.1%), TZS 166.9 billion (14.7%), and TZS 165.9 billion (14.7%) respectively, underscoring their reliance on agricultural activities. The Central Zone, however, lagged with only TZS 103.0 billion (9.1%), suggesting a need for economic diversification. The successful implementation of Point-of-Sale (POS) devices and online auctioning through the Tanzania Mercantile Exchange has notably enhanced revenue collection efficiency, pointing to the importance of modern collection strategies and public compliance initiatives in bolstering local government revenues.

1. Total Revenue Collection: The LGAs collected a total of TZS 1,132.1 billion, achieving 94.8% of the target for the year.
2. Zone-Wise Breakdown:
   • Dar es Salaam Zone:
     • Collection: TZS 277.3 billion
     • Share of Total LGA Revenue: 24.5%
     • Dar es Salaam contributed the largest share, highlighting its role as a key economic hub.
   • Lake Zone:
     • Collection: TZS 237.0 billion
     • Share of Total LGA Revenue: 20.9%
     • Significant revenue from the Lake Zone reflects its strong economic activities, including agriculture and trade.
   • Southern Highlands Zone:
     • Collection: TZS 182.3 billion
     • Share of Total LGA Revenue: 16.1%
     • This region’s contribution is supported by agricultural activities and improved collection systems.
   • Northern Zone:
     • Collection: TZS 166.9 billion
     • Share of Total LGA Revenue: 14.7%
     • The Northern Zone’s revenue was enhanced by tourism and agricultural trading.
   • South Eastern Zone:
     • Collection: TZS 165.9 billion
     • Share of Total LGA Revenue: 14.7%
     • Revenue in this zone benefited from the trade of food and cash crops and increased POS device usage.
   • Central Zone:
     • Collection: TZS 103.0 billion
     • Share of Total LGA Revenue: 9.1%
     • The Central Zone contributed the smallest share, possibly due to its smaller economic base relative to other zones.
3. Key Drivers:
   • The use of Point-of-Sale (POS) devices improved efficiency in tax collection.
   • Trading activities, especially in food and cash crops, were boosted by favorable harvests.
   • Online auctions of certain cash crops through the Tanzania Mercantile Exchange also contributed to the revenue increase.

The local government revenue for Tanzania’s fiscal year 2023/24 with key insights about regional economic dynamics and the impact of collection strategies:

1. Economic Disparity Across Zones:
   • Dar es Salaam's dominant contribution (24.5%) underscores its status as Tanzania’s economic hub. This suggests a concentration of commercial activities, services, and higher-value businesses within the city compared to other regions.
   • Regions like the Lake Zone and Southern Highlands also show strong economic activity, likely due to agriculture and trade, contributing significantly to the local government revenue base. However, other zones such as the Central Zone contribute less, possibly indicating limited economic diversity or smaller commercial bases.
2. Effectiveness of Enhanced Collection Systems:
   • The increased use of Point-of-Sale (POS) devices and online platforms for auctioning cash crops has enhanced revenue collection efficiency and compliance. This shows that investments in digital and streamlined collection systems can substantially improve tax performance, even in regions where traditional collection might be challenging.
3. Dependence on Agriculture and Trade:
   • Revenue collection in the Lake, Southern Highlands, and South Eastern zones highlights a reliance on agriculture as a critical source of income for local governments. This reliance suggests that agricultural productivity and favorable crop trading conditions have a direct impact on regional revenue outcomes.
4. Potential for Further Diversification:
   • The substantial revenue contributions from economically active zones like Dar es Salaam and the Lake Zone point to opportunities for other regions to develop their commercial sectors. If similar collection practices and economic incentives were introduced more broadly, other zones could see growth in their contributions.
5. Strategic Role of Public Awareness and Compliance:
   • The collection rates achieved (94.8% of the target) indicate that public awareness campaigns and government efforts to improve compliance are yielding positive results. Enhanced taxpayer education and streamlined processes appear to foster greater adherence to tax obligations, benefiting local revenue streams.

In the fiscal year 2023/24, Tanzania's tax revenue performance was notably strong, reaching TZS 27,138.4 billion, or 97.5% of the budgeted target, largely due to enhanced use of electronic fiscal devices (EFDs) and improved tax compliance stemming from ongoing public awareness campaigns. The Dar es Salaam Zone emerged as the dominant contributor, accounting for 89% of total tax revenue with TZS 24,145.7 billion, highlighting the region's significance as Tanzania's economic hub. In contrast, other zones such as the Northern Zone, Lake Zone, and Southern Highlands contributed significantly less, at 5.7%, 1.8%, and 1.4% respectively. Tax revenue sources showed that local goods and services generated TZS 11,988.5 billion (44.2% of total revenue), while taxes on imports made up TZS 10,518.5 billion (38.8%). Direct taxes represented a smaller share at TZS 4,631.3 billion (17.1%), indicating potential for growth in this area. This fiscal landscape underscores the need for Tanzania to diversify its revenue streams and address regional disparities to ensure sustainable economic growth.

Tax Revenue by Zone:

• Dar es Salaam Zone: Contributed the highest share, accounting for 89% of total tax revenue, with a collection of TZS 24,145.7 billion.
• Other Zones: The Lake Zone collected TZS 495.6 billion (1.8% of total), the Northern Zone TZS 1,550.8 billion (5.7%), and the Southern Highlands Zone TZS 385.0 billion (1.4%).

Tax Revenue by Category:

• Taxes on Local Goods and Services: Reached TZS 11,988.5 billion, representing 44.2% of the total revenue.
• Taxes on Imports: Totaled TZS 10,518.5 billion, making up 38.8% of revenue.
• Direct Tax: Accounted for TZS 4,631.3 billion, or 17.1% of total tax revenue.

Tanzania's tax revenue performance for the fiscal year 2023/24:

1. Overall Tax Performance: Tanzania's tax revenue closely aligned with government targets, reaching 97.5% of the budgeted target. This strong performance suggests that the government’s tax collection initiatives, such as the increased use of Electronic Fiscal Devices (EFDs) and efforts to improve tax compliance, have been effective. Public awareness efforts about tax obligations have likely played a role in encouraging compliance and maintaining steady revenue collection.
2. Regional Disparities in Tax Collection:
   • The Dar es Salaam Zone significantly outperformed other regions, contributing 89% of total tax revenue (TZS 24,145.7 billion). This dominance likely reflects Dar es Salaam’s economic activity, being Tanzania's primary commercial hub.
   • Other regions contributed significantly less: the Northern Zone (5.7%), the Lake Zone (1.8%), and the Southern Highlands Zone (1.4%). These numbers indicate a heavy reliance on Dar es Salaam for tax revenue and may highlight the economic disparity among regions.
3. Tax Revenue by Category:
   • Taxes on Local Goods and Services: Constituted the largest portion, 44.2% of total tax revenue (TZS 11,988.5 billion), indicating a strong domestic consumption base contributing to tax revenue.
   • Taxes on Imports: Accounted for 38.8% (TZS 10,518.5 billion), showing the importance of imports in Tanzania’s tax revenue structure. This dependency also suggests that international trade remains a significant revenue stream for the government.
   • Direct Tax: Made up 17.1% of total tax revenue (TZS 4,631.3 billion), which likely includes income and corporate taxes. This lower share compared to other categories may indicate room for improvement in direct tax collection, potentially through further initiatives to enhance individual and corporate tax compliance.

Implications: The data reflects the government’s reliance on a limited number of revenue sources and zones. The heavy dependency on Dar es Salaam and taxes from imports and consumption suggests that diversifying the tax base across regions and enhancing direct tax collections could strengthen future revenue resilience.

Tanzania's sectoral performance for the 2023/24 fiscal year reveals a mixed economic landscape with notable growth across various industries. The agricultural sector exhibited resilience, with food production increasing to 22.8 million tonnes, driven primarily by maize and rice, while cash crop procurement rose, exemplified by a 21% increase in cashew nuts. The manufacturing industry thrived, reporting a remarkable 35.3% surge in product value to TZS 18,622.9 billion, fueled by stable energy supplies and strong domestic demand. In contrast, the mining sector faced challenges, with a 2% decline in overall mineral recovery, although gold prices remained favorable. Tourism showed significant recovery, with visitor numbers climbing by 33.9% to 2.77 million, generating TZS 631.1 billion in revenue. Furthermore, electricity generation rose by 14.7% to 10,801.9 GWh, supported by new hydroelectric projects, while forestry and fishing saw increases in product values, despite sustainability concerns in the fishing industry. Overall, these figures highlight both growth opportunities and challenges that require strategic responses to ensure sustainable economic development in Tanzania.

1. Agriculture:
   • Food Production: Increased to 22.8 million tonnes in 2023/24 from 20.4 million tonnes in the previous year. Major contributors were maize (44.2% of total food production) and rice (13.4%).
   • Cash Crops: The volume of major cash crops procured rose, except for coffee and tea. For example, cashew nuts reached 244,797 tonnes, while cotton increased to 282,509.7 tonnes.
2. Manufacturing:
   • The value of selected manufactured products increased by 35.3%, reaching TZS 18,622.9 billion. Key products included beverages, cement, steel, and textiles, driven by stable power supply and strong domestic demand.
3. Mining:
   • The value of mineral recovery in Tanzania decreased by 2%, totaling USD 3,190.6 billion in 2023/24, primarily due to a drop in coal demand from European markets. Despite this, the value of gold—which remains the largest contributor to mining revenue—increased due to higher global market prices. The Lake Zone led with 61.6% of total mineral value, followed by the Southern Highlands with 14.9%. Minerals traded in market centers rose by 8.3% to TZS 2,454.5 billion, driven largely by a recovery in gold output and its strong market price, which accounted for 95% of total trade value in these centers.
4. Tourism:
   • Visitor numbers and revenue from national parks saw significant growth, with visitors rising by 33.9% to 2,773,232 and earnings increasing by 37.7% to TZS 631.1 billion. Most zones reported growth in visitor numbers and park revenue, with the Northern Zone accounting for the largest shares at 68.2% of visitors and 62.3% of total earnings. This growth reflects successful tourism promotion efforts and increasing interest in Tanzania’s natural attractions.
5. Energy:
   • Electricity generation increased by 14.7%, reaching 10,801.9 GWh in 2023/24, largely due to new power generation from the Julius Nyerere and Rusumo hydro plants. Improved infrastructure and rising demand from rural electrification projects further supported this growth. Higher water levels at key dams (New Pangani Falls, Nyumba ya Mungu, and Kihansi) and expanded capacity at Kinyerezi I extension and other thermal plants (Nyakato and Kigoma) contributed to the improved power output.
6. Forestry and Fishing:
   • Forestry: The value of forest products increased by 21.1% to TZS 1,157.1 billion, largely from high demand in processing industries and improved management.
   • Fishing: The value of fish sold in markets rose by 17% to TZS 655.6 billion, though the volume declined by 9.1% due to overfishing in Lake Victoria and Lake Tanganyika.

The sectoral performance data for Tanzania in 2023/24 reflects a mixed economic landscape characterized by growth with key industries while also highlighting challenges in others.

1. Agricultural Resilience:

The increase in food production to 22.8 million tonnes from 20.4 million tonnes indicates resilience in the agricultural sector. Major crops like maize and rice continue to dominate, showcasing the sector's capacity to meet food demands and enhance food security. The rise in cash crops, particularly cashew nuts and cotton, signals opportunities for export growth and rural income generation, despite the setbacks in coffee and tea production.

2. Manufacturing Growth:

A substantial 35.3% increase in the value of manufactured products, reaching TZS 18,622.9 billion, reflects a robust manufacturing sector bolstered by stable energy supplies and domestic demand. This growth suggests that the government’s efforts to enhance infrastructure and energy availability are paying off, enabling manufacturers to expand and diversify their production.

3. Mining Sector Challenges:

The 2% decline in mineral recovery value, especially in coal, alongside increased gold value due to favorable market prices, illustrates the volatility and dependency on global demand in the mining sector. The continued dominance of gold as a revenue driver shows its critical role in the economy, yet the decline in coal highlights the need for diversification and adaptation to market shifts, especially considering the importance of the Lake Zone in mineral production.

4. Tourism Revival:

The significant growth in tourism, with visitor numbers up 33.9% and revenue increasing by 37.7%, indicates a successful recovery and revitalization of the sector post-pandemic. The Northern Zone's dominance in visitor numbers and earnings showcases its appeal and importance as a key tourist destination, suggesting that ongoing promotional efforts and investments in the tourism sector are effective.

5. Energy Sector Expansion:

A 14.7% rise in electricity generation to 10,801.9 GWh demonstrates improvements in the energy sector, primarily driven by new hydroelectric projects and enhanced infrastructure. This growth is crucial for supporting other sectors of the economy, especially manufacturing and agriculture, and indicates the government's commitment to increasing energy capacity, which is essential for sustainable development.

6. Forestry and Fishing Developments:

The 21.1% increase in the value of forest products and the 17% rise in the value of fish sold reflect growing industries with significant contributions to local economies. However, the decline in fishing volume due to overfishing raises sustainability concerns that need to be addressed to ensure long-term viability. Improved management practices in forestry highlight the potential for growth in this sector, but it also underscores the importance of balancing economic activity with environmental sustainability.