1. Overall Collection Performance:
   • Total gross revenue collections, including domestic revenue, customs and excise, and large taxpayers, amounted to 7,638,538.8 million TShs for the quarter.
   • After adding treasury vouchers and subtracting refunds, the net revenue totaled 7,108,260.2 million TShs.
2. Departmental Contributions:
   • Customs and excise contributed the highest gross revenue (about 2,938,731.4 million TShs), followed closely by large taxpayers at 2,955,231.6 million TShs.
   • Domestic revenue accounted for 1,744,575.8 million TShs, reflecting steady monthly growth across July, August, and September.
3. Refunds and Adjustments:
   • Refunds, including VAT and income tax refunds, amounted to 548,160.0 million TShs, highlighting significant returns to businesses or overpaid taxes.
   • Income tax refunds specifically contributed 8,397.1 million TShs to the total adjustments, lowering the net revenue.
4. Direct and Indirect Tax Contributions:
   • Direct taxes collected within domestic regions were highest in MTD (around 286,083.6 million TShs), followed by Ilala and Kinondoni, indicating the economic density and tax contributions from these areas.
   • Indirect tax collections also reflected a significant contribution from MTD at 171,672.5 million TShs, with Ilala and Kinondoni contributing considerable amounts as well.
5. Regional Performance Highlights:
   • The MTD, Ilala, and Kinondoni regions consistently performed well in both direct and indirect tax collections, reflecting their substantial economic activities.
   • Other regions like Arusha, Dodoma, and Mwanza also made notable contributions, indicating growth and economic activity beyond major urban centers.
6. Specific Tax Items:
   • PAYE (Pay-As-You-Earn) led within direct tax items, amounting to 418,111.9 million TShs, showcasing its importance as a revenue stream from individual income.
   • Other direct taxes like gaming tax (51,556.5 million TShs) and rental tax (29,078.8 million TShs) show diversified tax contributions from non-traditional sources.
   • The newly implemented digital tax has yet to generate revenue, as indicated by a zero entry, suggesting either delayed enforcement or pending tax processing.

The top five regions in Tanzania for high revenues from direct taxes, indirect taxes, and customs duties. 

Notes:

• Direct Taxes typically include corporate taxes, personal income taxes, etc.
• Indirect Taxes encompass value-added tax (VAT), excise duties, etc.
• Customs Revenue refers to taxes levied on goods imported into the country.

Explanation:

• Dar es Salaam is the economic hub of Tanzania, contributing significantly across all tax categories due to its high concentration of businesses and trade activities.
• Mwanza has a strong indirect tax base due to trade activities, especially around Lake Victoria.
• Arusha and Dodoma serve as regional centers with varying contributions to tax revenues.
• Mbeya is generally lower in terms of direct and customs revenue but maintains some level of indirect tax contribution.

The hypothetical revenue data and analysis provide insights into the performance of Tanzania's tax collection system across three months—July, August, and September—while also hinting at regional variations that can be examined further.

1. Growth in Revenue:
   • The total revenue increased from TZS 450 billion in July to TZS 490 billion in August (an increase of 8.89%) and further to TZS 500 billion in September (an increase of 2.04%). This indicates a robust growth trend initially, which began to slow down in September.
2. Direct Tax Revenue:
   • Direct tax revenue increased steadily from TZS 150 billion to TZS 170 billion over the three months, with growth rates of 6.67% from July to August and 6.25% from August to September. This consistent increase suggests improved tax compliance and possibly broader tax bases.
3. Indirect Tax Revenue:
   • Indirect tax revenue showed a positive trend as well, growing from TZS 200 billion to TZS 220 billion, but with a decreasing growth rate (from 5.00% to 4.76%). This indicates that while the revenue collection was effective, it might not be as dynamic as direct taxes.
4. Customs Revenue:
   • Customs revenue had a spike from TZS 100 billion in July to TZS 120 billion in August (a significant increase of 20%). However, it dropped to TZS 110 billion in September, showing a negative change of -8.33%. This volatility suggests that customs revenue may be more sensitive to trade flows, global economic conditions, and policy changes.

Regional Variations in Revenue

Understanding regional variations is crucial for targeted fiscal policy and revenue generation strategies

1. Economic Activity:
   • Regions with higher economic activities, such as Dar es Salaam, Arusha, and Mwanza, typically generate higher direct and indirect tax revenues. For instance, Dar es Salaam is the commercial hub, likely leading in direct tax revenues due to a higher concentration of businesses.
2. Customs Revenue Variations:
   • Regions with significant ports or borders, such as Tanga and Mtwara, are likely to contribute more to customs revenues. Any fluctuations in trade activities, import/export regulations, or infrastructure issues (e.g., port congestion) could significantly impact customs revenue in these areas.
3. Agricultural vs. Industrial Regions:
   • Regions like Mbeya and Dodoma, primarily agricultural, may have lower indirect and direct tax revenues compared to industrial regions. However, agricultural taxes can be variable based on crop seasons and market prices.
4. Social and Economic Factors:
   • Regions may differ in compliance rates due to factors such as local governance, taxpayer education, and economic stability. For example, regions experiencing economic challenges may struggle with tax collection, leading to lower revenues.
5. Government Initiatives:
   • Regional variations may also be affected by government initiatives, such as incentives for certain industries or sectors. If the government focuses on boosting revenue in underperforming regions, this could shift revenue patterns over time.

Conclusion

The overall revenue collection in Tanzania is on an upward trend, the variations in revenue sources highlight the importance of region-specific economic activities and challenges. Policymakers should consider these dynamics to enhance revenue generation strategies, improve tax compliance, and ensure equitable economic development across regions.

This analysis emphasizes the need for continuous monitoring of revenue trends and regional performance to adapt fiscal policies that can effectively respond to the unique circumstances of each region. If actual figures or specific regional data are available, I can assist in providing a more detailed and precise analysis.

Activities across zones

In the fiscal year 2023/24, Tanzania's trade landscape, particularly in cross-border activities, displayed notable shifts across various regions. The overall trade surplus with neighboring countries decreased by 23.1%, settling at TZS 4,484.3 billion, driven by reduced exports in key sectors such as minerals and agricultural products, along with rising imports of manufactured goods. The Lake Zone emerged as the largest contributor to exports, totaling TZS 4,699.7 billion but marking a decline of 6.6% from the previous year, while the Southern Highlands saw a significant growth in agricultural exports, increasing by 17.4% to TZS 4,393.7 billion. Conversely, the Northern Zone faced a trade deficit of TZS 466.9 billion due to surging imports, highlighting a growing dependency on external goods. These dynamics underscore both the challenges and opportunities in Tanzania’s trade framework, emphasizing the need for policy interventions to bolster local production and enhance competitiveness in global markets.

1. Cross-Border Trade Surplus:
   • The overall trade surplus with neighboring countries narrowed by 23.1%, totaling TZS 4,484.3 billion. This decline was due to reduced exports, notably in minerals, fertilizers, live cattle, fish, and other consumables, coupled with increased imports of manufactured goods​.
2. Exports by Zone:
   • Lake Zone:
     • Export value: TZS 4,699.7 billion, a decrease of 6.6% from the previous year.
     • Lake Zone still accounted for the largest share of exports at 44.6% of total cross-border exports.
   • Southern Highlands:
     • Export value: TZS 4,393.7 billion, an increase of 17.4% year-over-year, reflecting growth in agricultural exports.
   • Northern Zone:
     • Export value: TZS 1,355.1 billion, showing a decrease of 7.2% from the prior year.
   • South Eastern Zone:
     • Export value was much smaller at TZS 96.8 billion, yet it marked a significant increase, suggesting emerging trade activities in this region​.
3. Imports by Zone:
   • Lake Zone: Recorded TZS 1,037.3 billion in imports, a slight decrease of 0.4%, accounting for 17.1% of the total import share.
   • Southern Highlands: Imported goods valued at TZS 3,200.4 billion, an increase of 55.5%, accounting for 52.8% of the total imports, driven mainly by manufactured goods.
   • Northern Zone: Imports rose to TZS 1,822.1 billion, a 38.2% increase, reflecting higher demand for goods like plastics, machinery, pharmaceuticals, and chemicals​(2024110115114536).
4. Trade Balance by Zone:
   • Lake Zone: Despite a reduction, it maintained a strong trade surplus of TZS 3,662.4 billion.
   • Southern Highlands: Had a surplus of TZS 1,193.3 billion, though it decreased by 29.1% compared to the previous year.
   • Northern Zone: Notably recorded a trade deficit of TZS 466.9 billion due to higher imports of manufactured goods.
   • South Eastern Zone: Saw a positive trade balance of TZS 95.5 billion, benefiting from growth in exports​.

Tanzania’s fiscal year 2023/24 provides insights into regional economic trends, challenges, and opportunities:

1. Strong Export Dependency on Agriculture:
   • Regions like the Lake Zone and Southern Highlands have robust exports, largely driven by agriculture, which accounted for significant shares of the country’s exports. This reliance on agricultural exports shows the importance of the agricultural sector to Tanzania’s trade balance but also highlights vulnerability to fluctuations in global demand or agricultural productivity.
2. Increasing Import Dependency:
   • The narrowing trade surplus and growth in imports, particularly in the Northern Zone, indicate rising domestic demand for manufactured goods like machinery, chemicals, and pharmaceuticals. This trend suggests that as Tanzania’s economy grows, there is an increasing need for imported industrial and consumer goods, possibly due to limited domestic production capacity for these items.
3. Regional Trade Imbalances:
   • The Lake Zone and Southern Highlands maintain trade surpluses, indicating these areas are economic strongholds in export production. In contrast, the Northern Zone recorded a trade deficit, driven by higher import needs. This imbalance points to a need for economic diversification in regions with trade deficits, as well as opportunities to boost local production to meet domestic demand and reduce import reliance.
4. Emerging Trade Activity in South Eastern Zone:
   • The growth in exports and trade balance in the South Eastern Zone, although from a smaller base, suggests that this region is starting to gain traction in cross-border trade. This growth could reflect improvements in infrastructure or strategic efforts to diversify Tanzania’s export portfolio.
5. Challenges with Export Competitiveness:
   • The overall reduction in exports, particularly in minerals and other commodities, indicates potential challenges in maintaining competitiveness or meeting international demand. This decrease could signal the need for investment in value-added processing to make Tanzania’s exports more competitive globally, beyond raw materials and basic agricultural products.
6. Trade as an Economic Indicator:
   • The trade patterns reflect broader economic dynamics, such as the growth in consumption and industrial needs across regions, increased reliance on imports, and the potential for further industrialization. The demand for imports underscores Tanzania’s growing economy, while the dependency on specific zones for export revenue highlights areas for policy focus, such as regional economic development, infrastructure, and manufacturing incentives.

Across different zones and GDP per capita

Tanzania's economic landscape in 2023 showcased robust growth, with the national GDP reaching TZS 188,788.1 billion, a significant increase from TZS 170,820 billion in 2022. This growth reflects a 10.5% rise, indicating resilience in various economic sectors despite global challenges.

Regionally, the Lake Zone emerged as the largest contributor, generating TZS 48,990.5 billion, which accounts for 25.9% of the national GDP. Following closely were the Dar es Salaam Zone and Northern Zone, contributing TZS 32,189.2 billion (17.1%) and TZS 32,484.9 billion (17.2%), respectively. Other zones, including the Southern Highlands, Central, and South Eastern, contributed TZS 29,859.8 billion (15.8%), TZS 25,521.6 billion (13.5%), and TZS 19,742.1 billion (10.5%), respectively, highlighting disparities in economic activity across the country.

In terms of GDP per capita, Dar es Salaam outpaced other regions significantly, recording TZS 5,743,367. The Northern Zone followed with TZS 3,612,424, and the Southern Highlands reached TZS 3,424,384. The national average stood at TZS 3,058,847, underscoring the economic concentration in urban areas while pointing to opportunities for development in less affluent regions. This distribution emphasizes the need for targeted investment and infrastructure improvements in areas with lower GDP per capita to foster inclusive growth and address regional economic disparities.

1. Overall National GDP:
   • Total GDP for Tanzania Mainland reached TZS 188,788.1 billion in 2023, up from TZS 170,820 billion in 2022.
2. Zonal GDP Contribution:
   • Lake Zone: Largest contributor with TZS 48,990.5 billion (25.9% of the national GDP).
   • Dar es Salaam Zone: TZS 32,189.2 billion (17.1%).
   • Northern Zone: TZS 32,484.9 billion (17.2%).
   • Southern Highlands Zone: TZS 29,859.8 billion (15.8%).
   • Central Zone: TZS 25,521.6 billion (13.5%).
   • South Eastern Zone: TZS 19,742.1 billion (10.5%).
3. GDP per Capita:
   • Dar es Salaam recorded the highest GDP per capita at TZS 5,743,367.
   • Northern Zone (Arusha, Kilimanjaro, Manyara, Tanga) followed with TZS 3,612,424.
   • Southern Highlands Zone (Mbeya, Njombe, Iringa, etc.) reached TZS 3,424,384.
   • The national average GDP per capita was TZS 3,058,847.

Tanzania's GDP highlights several key points

1. Regional Economic Disparities: Dar es Salaam’s high GDP per capita (TZS 5,743,367) compared to other regions shows a concentration of economic activities in the city. As Tanzania's commercial hub, Dar es Salaam benefits from strong financial, trade, manufacturing, and service sectors, which contrasts with more agriculturally dependent regions.
2. Lake Zone’s Economic Significance: The Lake Zone, contributing the highest share of national GDP (25.9%), emphasizes the economic importance of agriculture, mining, and fishing, which are dominant in that region. It also highlights potential for growth in other sectors if there are investments in infrastructure and industry.
3. Potential for Development in Southern Zones: The Southern Highlands and South Eastern zones, despite having large agricultural outputs and rich mineral resources, contribute less to GDP. This suggests untapped potential that could be leveraged with investment in infrastructure, energy, and processing industries to add value to raw products.
4. National Economic Structure: The dominance of agriculture, trade, transport, and construction as GDP drivers reflects Tanzania's focus on essential industries. However, the high reliance on agriculture makes the economy vulnerable to climate and market fluctuations, underlining the need for economic diversification.
5. Opportunities for Inclusive Growth: Regions with lower GDP per capita, like the Central and South Eastern zones, may benefit from targeted development initiatives, such as improved access to markets, financial services, and investment in education and skills development. This could promote more balanced growth across the country.

Opportunities, Challenges, and the Road to 2030

Small and Medium Enterprises (SMEs) are the backbone of Tanzania’s economy, accounting for 35% of the Gross Domestic Product (GDP) and providing 50% of national employment. The sector, which includes over 95% of the country’s businesses, spans industries such as agriculture, manufacturing, services, and construction. Despite its scale, Tanzania SMEs face systemic barriers that inhibit their growth and sustainability. This article explores the current landscape of Tanzania’s SME sector, emphasizing market dynamics, policy frameworks, and resource access.

1. Market Distribution and Sector Dynamics

SMEs are concentrated in four primary sectors:

• Agriculture: Accounts for 40% of SMEs, playing a vital role in food security and rural employment.
• Manufacturing: Covers 30%, primarily focusing on food processing, textiles, and consumer goods.
• Services: Represents 25%, encompassing retail, hospitality, and professional services.
• Construction: Holds 5%, spurred by urbanization and infrastructure development initiatives​.

This distribution reflects the sector’s diversity and potential; however, 72% of Tanzania SMEs operate informally, limiting their access to credit and government incentives. As of 2023, only 30-50% of SMEs survive past five years, highlighting the need for increased support and formalization.

2. Financial and Resource Accessibility

The financial accessibility for Tanzania SMEs remains limited, with only 20% of SMEs obtaining formal financial services. High-interest rates (17-20%) and stringent collateral requirements make traditional financing inaccessible for many, leading most SMEs to rely on personal savings. Technological resources are also unevenly distributed, with urban areas adopting digital solutions such as mobile money at higher rates than rural areas, where infrastructure and digital literacy are lagging.

Figures:

• Formal Financial Access: 20% of SMEs​.
• Mobile Money Penetration: 53%, primarily benefiting urban SMEs​.

3. Regulatory Challenges and Policy Initiatives

High compliance costs, complex tax structures, and prolonged registration procedures discourage many SMEs from formalizing. Tanzania ranks 141st on the World Bank's Ease of Doing Business Index, with 70% of SMEs reporting compliance difficulties due to multiple tax obligations and labor regulations.

Figures:

• Ease of Doing Business Ranking: 141 out of 190 countries.
• Tax Compliance Difficulty: 70% of SMEs struggle with regulatory requirements​.

4. Investment Landscape and Opportunities

High-potential sectors, including agribusiness, ICT, and tourism, present opportunities for growth. Tanzania’s agribusiness SMEs make up 40% of the sector, benefiting from regional demand and the nation’s arable land. The ICT sector is expanding, driven by rising mobile penetration and digital adoption, creating prospects for e-commerce and digital financial services. However, challenges such as inadequate infrastructure and limited financing hinder SME investment and sectoral expansion.

Figures:

• Agribusiness Sector: 40% of SMEs​.
• Projected FDI Growth: +50% with infrastructure and policy improvements by 2030​.

5. Projections for 2030 and Conclusion

If Tanzania strengthens support for SMEs, particularly through simplified regulatory frameworks, digital infrastructure, and financing options, the SME sector’s GDP contribution could reach 45% by 2030, with employment rising to 60%. Improving access to formal financing, especially in rural areas, and expanding digital infrastructure are crucial steps for empowering SMEs to drive economic resilience and sustainability.

2030 Projections:

• GDP Contribution: 45% (up from 35%).
• Employment Contribution: 60% (up from 50%)​(SME Market Landscape).

In conclusion, Tanzania’s SMEs are essential for economic stability and job creation. With targeted policies and resources, SMEs can enhance their impact on the economy, contributing to a diversified, inclusive, and resilient Tanzania by 2030.

Growth, Challenges, and Future Prospects

Introduction

The banking and finance sector in Tanzania has transformed significantly over the past two decades, with growth fueled by regulatory changes, digital innovations, and increased foreign investment. By 2023, the sector included 49 licensed banks and a growing number of microfinance institutions, collectively managing assets of TZS 43 trillion (USD 18 billion), which represents about 20% of Tanzania’s GDP. This article explores the sector's current landscape, the challenges it faces, and its projected growth through 2030.

Sector Growth and Digital Transformation

Tanzania’s financial landscape has embraced digital banking, with mobile money playing a pivotal role. From 25.8 million accounts in 2019, mobile money has surged by 116.2%, reaching over 55.8 million accounts by 2024. Monthly transactions now exceed 310.9 million, driven by platforms like M-Pesa, Tigo Pesa, and Airtel Money. Mobile banking has also greatly improved financial inclusivity, raising the rate of financial access to 70% in 2024, up from just 16% in 2009.

While financial access is extensive in urban areas (85%), it lags in rural areas at 55%, highlighting the need for further expansion efforts. Despite digital strides, many rural residents still lack sufficient banking services, with mobile banking being the only viable option for some remote regions.

Challenges Facing the Sector

1. Regulatory and Compliance Costs: Compliance, especially with anti-money laundering (AML) and capital requirements, has added over 20% to operational expenses for banks. These high costs, combined with complex regulations, can be particularly burdensome for smaller banks and microfinance institutions.
2. Rural Financial Access Gaps: Limited branch networks in rural areas make mobile banking essential, yet 30% of the population still lacks access to formal financial services. Developing alternative delivery models will be crucial to bridging this divide.
3. High Lending Rates: With loan interest rates averaging 16%, credit access is limited, especially for small and medium enterprises (SMEs), which make up 90% of Tanzania’s businesses but only 16% have formal financing. This restricts the growth potential of private businesses.

Investment Opportunities

The banking sector’s future promises numerous investment opportunities:

• Digital and Mobile Banking: Mobile money transactions are projected to exceed 10 billion by 2030, with the digital banking sector expected to grow at an annual rate of 12%. Opportunities abound for investors in fintech infrastructure to support this growth.
• SME Financing: The SME loan market is anticipated to grow by 10% annually, reflecting unmet demand in a largely underserved business segment.
• Green Financing: Driven by environmental sustainability goals, green financing for agriculture and energy projects is forecasted to grow by 15% annually, providing opportunities for investors focused on eco-friendly initiatives.

Future Outlook: Banking in Tanzania by 2030

By 2030, Tanzania’s banking sector aims to become more inclusive and competitive, with 90% of adults expected to have access to financial services. The number of mobile money accounts could reach 90 million, and microfinance institutions are projected to hold 30% of the sector’s total assets. Increased competition among banks, regulatory improvements, and enhanced digital literacy initiatives are essential to achieving this ambitious vision.

Conclusion and Recommendations

Despite its growth, Tanzania’s banking sector faces several challenges, particularly in compliance costs, financial literacy, and rural access. To achieve a more inclusive, competitive landscape, it’s crucial to streamline regulatory frameworks, promote incentives for rural financial inclusion, and invest in digital infrastructure. By addressing these challenges, Tanzania can position its banking sector as a leader in Sub-Saharan Africa, delivering on the promise of accessible and sustainable financial services for all.

Business Environment and Economic Growth

Tanzania’s tax reforms and policy adjustments have significantly shaped the business landscape and economic trajectory. These reforms have enhanced revenue collection while identifying policy areas that, with adjustments, could spur further growth and broaden Tanzania’s investment opportunities.

1. Current Taxation Landscape in Tanzania

In 2023/2024, Tanzania’s tax revenue reached approximately TZS 27.64 trillion, showing a robust 14.47% growth from the previous year. Major revenue contributions came from services (28.2%), trade (23.6%), and manufacturing (17.7%). Although recent reforms have increased collection efficiency, compliance costs remain a challenge, averaging 2% of annual revenue for businesses, particularly small and medium enterprises (SMEs). This burden can hinder growth and disincentivize formalization within the economy, impacting the government's ability to capture potential tax revenues.

2. Policy and Regulatory Challenges

Tanzania’s regulatory and tax framework presents complexities that are particularly challenging for SMEs. Despite recent improvements, the World Bank’s Ease of Doing Business Index (2024) scores Tanzania at 59, indicating moderate entry barriers. While comprehensive, the regulatory environment's high compliance costs and complexity rank Tanzania at 162 out of 190 for tax compliance ease. These burdens limit profitability for many businesses, especially SMEs, reducing available resources for reinvestment.

3. Foreign Direct Investment and Sectoral Growth Potential

In 2023/2024, Foreign Direct Investment (FDI) inflows reached approximately USD 1.5 billion, with strong interest in sectors such as energy, mining, and agriculture. With targeted policy reforms, FDI could increase at an annual rate of 10%, reaching an estimated USD 2.8 billion by 2030. Additionally, sectoral growth projections, such as an annual increase of 6-8% in agriculture and 7% in manufacturing, indicate a promising outlook if policies continue to incentivize investment and tax compliance.

4. Role of Key Stakeholders in Driving Tax Compliance and Economic Growth

The Tanzania Revenue Authority (TRA) is essential in enforcing tax compliance through initiatives like taxpayer education and digital tax solutions, such as Electronic Fiscal Devices (EFDs), which ensure real-time tracking and transparency. Local Government Authorities (LGAs) also play a role, especially in formalizing the informal sector through local levies. Industry organizations, including the Tanzania Private Sector Foundation (TPSF) and Confederation of Tanzanian Industries (CTI), advocate for policies that streamline tax compliance and reduce SME burdens to foster sectoral growth and economic resilience.

5. Key Figures: Projections for 2030

If current reforms continue, Tanzania's total tax revenue could increase from TZS 27.64 trillion in 2023/2024 to TZS 40 trillion by 2030. A reduction in compliance costs to 1.5% of revenue could free up resources for business expansion. Additionally, with a projected Ease of Doing Business Score increase to 70 by 2030, Tanzania’s economic environment is expected to be more attractive for investment, supporting sustained growth across key sectors.

Conclusion

Through targeted tax reforms, Tanzania can strengthen its tax revenue base, reduce compliance costs, and enhance its attractiveness as an investment destination. This will drive sustainable economic growth, create jobs, and improve Tanzania’s competitiveness within the East African region. For these reforms to succeed, collaboration among government agencies, private sector organizations, and civil society is crucial to establishing an inclusive economic environment that benefits all Tanzanians.

Tanzania's labor market is undergoing a transformation as the country strives to shift more of its workforce into formal employment. As of 2023, Tanzania's workforce stands at approximately 36 million people, with 28% in formal employment and 72% in informal employment. These shifts reveal opportunities for economic growth but also underscore significant challenges in formalizing informal sector employment.

Employment Landscape in Tanzania

The formal sector employs around 10.07 million individuals, with most in the private sector (9.33 million), while the public sector supports approximately 741,967 jobs. In contrast, the informal sector is vast, with around 25.95 million workers, mostly engaged in agriculture, retail, and small-scale manufacturing. This segment lacks job security and benefits, making it vulnerable to economic shifts.

Public and Private Sector Employment

In the public sector, the government allocated TZS 11.3 trillion for wages in the 2023/2024 fiscal year, supporting roles in civil service, healthcare, and education. The private sector's role is crucial, employing nearly 93% of all formal workers and contributing significantly to the national tax base. With an annual salary average of TZS 15.25 million per formal sector employee, private businesses are a vital economic force.

Informal Employment Breakdown

The informal sector is dominated by agriculture and fishing, which accounts for 65-70% of informal jobs. Retail trade employs 10-15%, followed by manufacturing, crafts, and construction. Regions like Dar es Salaam and Mwanza showcase significant informal employment, with informal rates as high as 72%, reflecting regional dependence on informal job sectors.

Key Economic Indicators and Projections

1. Unemployment Trends: Tanzania’s unemployment rate has shown gradual improvement, reducing from 9% in 2021 to 8.8% in 2023 and Projected to reach 8.1% in 2030, marking a positive trend in job creation.
2. Economic Forecast for 2024-2030: Formal employment is expected to increase from 28% to 38% by 2030, driven by growth in sectors such as manufacturing, services, and agriculture. By 2030, approximately 15.8 million individuals are projected to be in formal employment, reducing informal employment rates to 62%.
3. Projected Workforce and Sectoral Growth:
   • Manufacturing and Industry: 25% of the formal workforce
   • Services and Tourism: 22%
   • Modern Agriculture: 20%
   • Construction and Infrastructure: 15%
   • Technology and Digital Services: 10%

Challenges in Transitioning from Informal to Formal Employment

The shift from informal to formal employment involves obstacles, such as:

• Regulatory Barriers: Complicated regulations deter informal businesses from formalizing.
• Skills Gaps: Workers moving from informal to formal sectors often lack necessary skills, impacting productivity.
• Infrastructure Limitations: Insufficient infrastructure, particularly in rural areas, hinders formal sector growth.

Recommendations

1. Expand Formal Sector Support: Simplify business registration and tax compliance processes to encourage informal businesses to transition.
2. Enhance Vocational Training: Align educational programs with formal sector needs to support skill development.
3. Improve Social Protection: Extend social security coverage to include more formal workers, offering a safety net for transitioning employees.
4. Sector-Specific Policies: Introduce targeted policies to modernize agriculture, foster innovation in urban sectors, and promote industry expansion.
5. Invest in Infrastructure: Focus on digital and physical infrastructure to improve business efficiency and facilitate formal sector growth.

Conclusion

Tanzania’s employment dynamics are at a turning point, with formal employment showing steady growth. With careful planning, investment in infrastructure, and strategic policy reforms, Tanzania can continue to transition towards a more stable and secure labor market that benefits both the economy and the workforce.

Rising Exports, Narrowing Deficits, and Strategic Growth to 2030

The East African Community (EAC) has demonstrated steady growth in international merchandise trade, reaching US$ 26.9 billion in Q1 2024—a 4% increase from the previous year—driven by a 12% rise in exports to US$ 11.3 billion and a slight 2% drop in imports to US$ 15.6 billion. This positive trend has helped reduce the trade deficit to US$ 4.2 billion, with major trade partners like China, UAE, and India contributing 45% of the region's trade volume. Projections to 2030 indicate sustained trade growth, potential export surpluses, and stronger intra-African trade, positioning the EAC as a vital player in the global market.

1. Total Trade Value:
   • The EAC traded goods worth US$ 26.9 billion with the rest of the world in Q1 2024.
   • This represents a 4% increase compared to US$ 25.9 billion in Q1 2023.
2. Exports and Imports:
   • Exports: Increased by 12%, rising from US$ 10.1 billion in Q1 2023 to US$ 11.3 billion in Q1 2024.
   • Imports: Slight decrease of 2%, from US$ 15.8 billion in Q1 2023 to US$ 15.6 billion in Q1 2024.
3. Trade Deficit:
   • The trade deficit narrowed to US$ 4.2 billion in Q1 2024 from US$ 5.7 billion in Q1 2023, mainly due to a rise in exports.
4. Top Trading Partners:
   • Major partners included China, UAE, and India, collectively accounting for 45% of the EAC’s total trade.
   • China led with trade valued at US$ 7.3 billion.
5. Intra-African Trade:
   • Trade with African countries totaled US$ 6.0 billion, making up 22.4% of EAC’s total trade.
   • Intra-EAC trade was US$ 3.3 billion, contributing 12.3% to the region's trade.

The growth in exports, narrowing trade deficit, and the EAC's trade reliance on key global partners and African neighbors​.

Here is the forecast for the EAC's international merchandise trade from 2025 to 2030:

Key Points of the Forecast:

• Total Trade: Projected to grow from US$ 27.98 billion in 2025 to US$ 34.04 billion by 2030.
• Exports: Expected to nearly double, reaching US$ 17.93 billion by 2030.
• Imports: Forecasted to increase more slowly, reaching US$ 17.57 billion by 2030.
• Trade Deficit: Expected to narrow and turn into a slight trade surplus of US$ 0.36 billion by 2030 as export growth outpaces imports.

The forecast and recent trends in the EAC's international merchandise trade highlight several significant insights about the region's economic trajectory and trade dynamics:

1. Steady Growth in Trade:
   The projected steady growth in total trade (from US$ 26.9 billion in 2024 to US$ 34.04 billion by 2030) reflects a positive economic outlook for the EAC. This growth suggests that regional economies are likely to become more integrated with global markets, benefiting from increased exports and a stable demand for imports.
2. Expanding Export Capacity:
   The faster growth rate of exports (an average annual increase of 8%) indicates that the EAC is building stronger, competitive export sectors. This could be due to regional policies aimed at boosting manufacturing, agriculture, and value-added production to generate higher export volumes.
3. Trade Deficit Reduction:
   The narrowing trade deficit—projected to close by 2030—points to the EAC's gradual shift towards a more balanced trade profile. With exports expected to surpass imports by 2030, this shift reflects improvements in the region's productivity and self-reliance.
4. Dependence on Key Trade Partners:
   Trade relationships with major global economies like China, the UAE, and India (accounting for 45% of total trade) highlight a continued dependence on a few large partners. This dependence might expose the EAC to external shocks from these economies, underlining the importance of diversifying trade partnerships, especially within Africa.
5. Increasing Intra-African Trade Potential:
   With intra-African trade already contributing 22.4% of total trade, there is substantial potential for EAC countries to leverage the African Continental Free Trade Area (AfCFTA) to further strengthen regional trade networks. This could help reduce trade barriers, increase competitiveness, and support sustainable economic growth.
6. Economic Diversification and Resilience:
   The trends suggest that EAC countries are moving towards more resilient economic structures by growing exports and reducing trade imbalances. This diversification effort could lead to greater economic stability, improve the balance of payments, and reduce vulnerability to global economic changes.

1. EAC Regional Headline Inflation:

The annual Headline Inflation in the EAC region was 6.7% in March 2024, up from 4.1% in February 2024. This figure indicates a region-wide increase in general prices.

• By Country:
  • Burundi: 26% headline inflation in 2023.
  • Kenya: 7.7% in 2023.
  • Rwanda: 12.2% in 2023.
  • South Sudan: High fluctuation at 22.5% as of March 2024.
  • Tanzania: 3.8% in 2023.
  • Uganda: 5.4% in 2023nual Average Headline Inflation**:

2. Annual Average Headline Inflation

For the EAC region, the annual average headline inflation for the fiscal year 2022/23 was 7.2%, up from 4.2% in the previous fiscal year.

• By Country:
  • Burundi: 26.0% in 2023.
  • Kenya: 7.7%.
  • Rwanda: 12.2%.
  • South Sudan: 2.4%.
  • Tanzania: 3.8%.
  • Uganda: 5.4%.

3. Core Inflation:

Annual Core Inflation for the EAC region stood at 7.1% in March 2024, rising from 4.3% in February 2024.

• By Country:
  • Burundi: 19.9% average in 2023.
  • Kenya: 5.9%.
  • Rwanda: 10%.
  • Tanzania: 2%.
  • Uganda: 4.7%.
  • South Sudan: 9.8%.

The East African Community (EAC) region is projected to experience gradual inflation stabilization through 2030, reflecting coordinated economic policies aimed at controlling price pressures. In 2023, the EAC’s headline inflation stood at 6.7%, with variations across member states, from a low of 3.8% in Tanzania to a high of 26% in Burundi. Forecasts indicate a decline across all EAC countries, with regional headline inflation expected to reach 5.8% by 2030. Significant reductions are anticipated for high-inflation economies, such as Burundi, projected to decrease to 14.5%, and South Sudan to 10.8%, supporting a more balanced and predictable economic environment in the EAC.

1. Headline Inflation: This forecast shows a gradual decrease in headline inflation across all EAC countries, with high-inflation economies like Burundi and South Sudan expected to make the most significant adjustments. This trend suggests improved economic stability, with lower inflation benefiting household purchasing power and business predictability.
   • EAC Region: Reduction from 6.7% to 5.8% reflects region-wide stabilization efforts.
   • Burundi: A sharp decline from 26% to 14.5% indicates ambitious policy interventions.
   • Tanzania: Remains the most stable, showing minimal fluctuation, reflecting sound inflation management.
2. Annual Average Headline Inflation: Annual average inflation also reflects a gradual decline, with all countries, especially Burundi and South Sudan, aiming for more moderate rates. The EAC region is projected to ease from 7.2% in 2023 to 6.3% by 2030, showing collective efforts toward reducing inflationary pressures.
   • Burundi and South Sudan: Show high initial inflation but strong projected declines, indicating substantial adjustments.
   • Kenya and Uganda: Project smaller declines, signifying their comparatively stable inflation environment.
3. Core Inflation: Core inflation, which excludes volatile items like food and fuel, is expected to decline steadily. This trend indicates improvements in price stability for essential goods and services across the region.
   • Burundi: High core inflation (19.9%) is projected to halve by 2030, suggesting strong measures to control price instability.
   • EAC Region: The reduction from 7.1% to 5.7% shows a region-wide commitment to stable core prices.
   • Tanzania and Uganda: Project relatively stable and low core inflation, indicating well-managed inflation policies.

The forecasted headline inflation for each EAC country and the region through 2030

The forecasted headline inflation trends for each EAC country through 2030 show a gradual decline across the region, reflecting stabilization efforts:

• EAC Region: Inflation is expected to reduce from 6.7% in 2023 to 5.8% by 2030, indicating a steady regional stabilization.
• Burundi: Starting from a high of 26% in 2023, inflation is projected to decrease significantly to 14.5% by 2030, due to anticipated economic adjustments.
• Kenya: Moderate declines are forecasted, with inflation reducing slightly from 7.7% in 2023 to 7.2% by 2030, suggesting a relatively stable inflation rate.
• Rwanda: Expected to see a gradual decline from 12.2% in 2023 to 9.9% by 2030 as price pressures ease.
• South Sudan: Volatile inflation is set to decrease from 22.5% in 2023 to 10.8% by 2030, reflecting significant economic stabilization efforts.
• Tanzania: Remaining stable, inflation is forecasted to stay around 3.7% throughout the period, reflecting consistent economic stability.
• Uganda: Inflation is expected to gradually decline from 5.4% in 2023 to 4.7% by 2030, indicating a steady control over price levels.

Annual Average Headline Inflation Forecast for each EAC country and the region through 2030

The projected Annual Average Headline Inflation for each East African Community (EAC) country and the region through 2030 shows a gradual reduction in inflation rates, with stabilization in most countries as economic policies are anticipated to moderate inflationary pressures:

• EAC Region: Starting at 7.2% in 2023, inflation is expected to slowly decline to 6.3% by 2030, reflecting regional efforts to stabilize prices.
• Burundi: With the highest initial inflation of 26.0% in 2023, Burundi's rate is projected to decrease significantly, reaching 14.5% by 2030, due to aggressive measures to curb inflation.
• Kenya: Kenya’s inflation is relatively stable, moving from 7.7% in 2023 to 7.2% by 2030, showing a slight reduction as inflationary pressures ease.
• Rwanda: Starting at 12.2% in 2023, Rwanda’s inflation is forecasted to drop to 9.9% by 2030, as price growth stabilizes.
• South Sudan: With a volatile starting rate of 2.4% in 2023, South Sudan’s inflation is expected to decline gradually to 1.6% by 2030.
• Tanzania: Starting with a low rate of 3.8% in 2023, Tanzania’s inflation is projected to remain steady, reaching 3.7% by 2030, indicating ongoing price stability.
• Uganda: Inflation in Uganda begins at 5.4% in 2023, decreasing gradually to 4.7% by 2030 as inflation moderates in line with regional trends.

Core Inflation Forecast for each EAC country and the region through 2030

The core inflation forecast for the EAC region and each country through 2030 reflects a gradual reduction in inflation rates as countries aim for economic stabilization:

• EAC Region: Core inflation is expected to reduce from 7.1% in 2023 to 5.7% by 2030, indicating an overall decline in price volatility across the region.
• Burundi: Starting at a high of 19.9% in 2023, core inflation is projected to decrease significantly to 10.3% by 2030, reflecting efforts to control extreme inflation.
• Kenya: A gradual decrease is forecasted from 5.9% in 2023 to 5.1% by 2030, showing moderate inflation stability.
• Rwanda: Core inflation is expected to decrease from 10.0% in 2023 to 7.5% in 2030, suggesting improvement but a slower decline.
• South Sudan: High initial volatility at 9.8% in 2023 is projected to decline to 5.9% by 2030, aiming for more stability.
• Tanzania: Core inflation remains relatively stable, slightly declining from 2.0% in 2023 to 1.9% by 2030, indicating a well-managed inflation rate.
• Uganda: Projected to decrease from 4.7% in 2023 to 3.8% by 2030, showing a steady inflation management path.

Deni la nje la Tanzania limeongezeka kwa kiwango kikubwa katika miaka ya hivi karibuni, likifikia TZS 78.8 trilioni (sawa na USD 32,675.10 milioni) mwezi Agosti 2024. Huu ni ongezeko kubwa ikilinganishwa na rekodi ya kiwango cha chini ya TZS 5.96 trilioni (sawa na USD 2,469.70 milioni) mnamo Desemba 2011, huku wastani ukiwa ni TZS 47 trilioni (sawa na USD 19,468.10 milioni) kwa kipindi cha 2011 hadi 2024. Kuongezeka kutoka TZS 77.2 trilioni (USD 31,993.90 milioni) mwezi Julai hadi TZS 78.8 trilioni (USD 32,675.10 milioni) mwezi Agosti 2024 kunadhihirisha utegemezi unaoendelea wa nchi kwenye ufadhili wa nje kwa miradi ya maendeleo na matumizi ya umma.

Vidokezo Muhimu:

• Deni la Nje la Tanzania: TZS 78.8 trilioni (Agosti 2024).
• Wastani (2011-2024): TZS 47 trilioni.
• Rekodi ya Chini: TZS 5.96 trilioni (Desemba 2011).

Nafasi ya Tanzania Afrika Mashariki na Afrika
Afrika Mashariki: Tanzania ni moja ya nchi zenye uchumi mkubwa Afrika Mashariki, ikiwa na deni la nje linaloonyesha uwekezaji mkubwa kwenye miundombinu, nishati, na viwanda. Ongezeko la deni ni kutokana na mahitaji ya ufadhili kwa miradi mikubwa kama bandari, reli, na vituo vya nishati. Miongoni mwa nchi za Afrika Mashariki, Tanzania ni mojawapo ya nchi zenye deni kubwa la nje, ingawa Kenya pia ina deni kubwa la KES 5.151 trilioni (karibu USD 34.5 bilioni) kufikia Juni 2024.

Kulinganisha na Nchi za Afrika Mashariki (Deni kwa USD):

1. Kenya: TZS 129.5 trilioni (USD 51.51 bilioni) (Juni 2024)
2. Tanzania: TZS 78.8 trilioni (USD 32.68 bilioni) (Agosti 2024)
3. Rwanda: TZS 15.1 trilioni (USD 6.26 bilioni) (Desemba 2022)
4. Burundi: BIF 1,857.79 bilioni (~Thamani ya chini ikilinganishwa na Rwanda)

Afrika: Katika bara zima la Afrika, deni la nje la Tanzania ni chini ya nchi kama Afrika Kusini na Misri lakini ni kubwa kuliko nchi nyingi ndogo. Kwa mfano, Afrika Kusini ilikuwa na deni la nje la USD 163,852 milioni kufikia Juni 2024, huku Misri ikiwa na USD 160,607 milioni Machi 2024.

Orodha ya Nchi 10 Bora za Afrika Zenye Deni Kubwa la Nje (kulingana na data ya hivi karibuni):

1. Afrika Kusini: USD 163,852 milioni (Juni 2024)
2. Misri: USD 160,607 milioni (Machi 2024)
3. Nigeria: USD 42,120 milioni (Machi 2024)
4. Kenya: USD 34.5 bilioni (Juni 2024)
5. Tanzania: USD 32,675 milioni (Agosti 2024)
6. Ghana: USD 31,024 milioni (Juni 2024)
7. Angola: USD 50,260 milioni (Desemba 2023)
8. Zambia: USD 8,024 milioni (Desemba 2023)
9. Zimbabwe: USD 13,325 milioni (Desemba 2020)
10. Morocco: MAD 676,819 milioni (~USD 66.7 bilioni) (Desemba 2022)

Athari za Kiuchumi kwa Tanzania
Ongezeko la deni la Tanzania ni ishara ya ajenda yake ya maendeleo yenye malengo makubwa, ambayo yanahitaji mtaji mkubwa. Ingawa ufadhili huu wa nje ni muhimu kwa maendeleo ya miundombinu na ukuaji wa uchumi, usimamizi wa viwango vya deni ni muhimu ili kuepuka gharama kubwa za kulipa deni ambazo zinaweza kupunguza nafasi ya kufadhili sekta nyingine za maendeleo.

Muhtasari wa Maeneo Muhimu ya Deni la Tanzania:

1. Ukuaji wa Deni la Nje la Tanzania
   • Ukuaji Mkubwa: Deni la nje la Tanzania limeongezeka kutoka USD 2.47 bilioni mnamo Desemba 2011 hadi USD 32.68 bilioni kufikia Agosti 2024.
   • Mwelekeo wa Hivi Karibuni: Deni limeongezeka kutoka USD 31.99 bilioni mnamo Julai 2024 hadi USD 32.68 bilioni mnamo Agosti 2024.
   • Wastani wa Deni: Kwa kipindi cha 2011 hadi 2024, wastani wa deni la Tanzania ilikuwa USD 19.47 bilioni.
2. Nafasi ya Tanzania Afrika Mashariki
   • Tanzania ni moja ya nchi kubwa kiuchumi Afrika Mashariki, na deni la nje la pili kwa ukubwa baada ya Kenya.
   • Kulinganisha na Nchi za Afrika Mashariki:
     • Kenya inaongoza kwa deni la nje la USD 34.5 bilioni mnamo Juni 2024.
     • Tanzania inafuatia na USD 32.68 bilioni mnamo Agosti 2024.
     • Rwanda (USD 6.26 bilioni mnamo Desemba 2022) na Burundi zina deni la chini sana.
3. Nafasi ya Tanzania Afrika
   • Tanzania inashikilia nafasi ya tano miongoni mwa nchi za Afrika zenye deni kubwa la nje, nyuma ya Ghana (USD 31.02 bilioni) na Zambia (USD 8.02 bilioni), lakini chini ya nchi kama Afrika Kusini na Misri.
4. Athari kwa Tanzania
   • Ajenda ya Maendeleo: Ongezeko kubwa la deni linaonyesha dhamira ya Tanzania ya kupanua miundombinu, nishati, na sekta ya viwanda.
   • Changamoto ya Usimamizi wa Deni: Uwekezaji huu wa deni unahitaji usimamizi thabiti ili kuhakikisha kuwa fedha zilizokopwa zinatumika kwa ufanisi.
   • Matumizi ya Fedha za Kukopa: Changamoto kuu kwa Tanzania ni kuhakikisha kuwa fedha hizi zinazalisha matokeo ya kiuchumi kama ongezeko la uwezo wa uzalishaji, mauzo ya nje, na ajira.
   • Mashindano ya Kanda: Ongezeko la deni la Tanzania linaakisi ushindani na nchi nyingine za Afrika Mashariki, hususan Kenya.

Hitimisho
Deni la nje la Tanzania linaonyesha mipango yake ya maendeleo lakini ongezeko kubwa la deni linazua maswali kuhusu uhimilivu wa deni. Kama moja ya nchi zenye uchumi mkubwa Afrika Mashariki, Tanzania inafanya maendeleo makubwa katika miundombinu na viwanda lakini inapaswa kusimamia deni kwa umakini ili kudumisha utulivu wa kifedha wa muda mrefu.