The Tanzania Revenue Authority (TRA) demonstrated exceptional performance in the first half of the 2024/2025 fiscal year, consistently exceeding revenue targets with efficiency rates above 100% and achieving year-on-year growth ranging from 15% to 23.6%. With total collections peaking at TZS 3.587 trillion in December 2024, driven by strengthened economic activities and improved tax compliance, TRA's strategic initiatives have set a solid foundation for continued growth. Forecasts for January–June 2025 project sustained revenue momentum, reinforcing TRA's pivotal role in enhancing Tanzania’s fiscal stability and economic development.

1. Overview of Monthly Performance

The table shows the revenue collections compared to targets and highlights both efficiency (how much was collected compared to the target) and growth (how much collections increased compared to the previous year).

2. Key Observations

A. Efficiency (Target Achievement)

• July 2024: Revenue collection was 104.45% of the target (TZS 2.347 trillion collected against a target of TZS 2.247 trillion).
• October 2024: The highest efficiency was recorded at 107.45%, showing TRA’s strong performance in meeting and exceeding targets.
• December 2024: Efficiency was 103.52%, indicating slight overperformance relative to the target of TZS 3.465 trillion.

B. Growth (Year-on-Year Increase)

• July 2024: Revenue grew by 21.04% from TZS 1.939 trillion in July 2023/2024 to TZS 2.347 trillion in 2024/2025.
• October 2024: This month recorded the highest growth at 23.60%, a sign of increased economic activity or improved tax compliance mechanisms.
• December 2024: Growth was 17.61%, an improvement of TZS 0.537 trillion compared to December 2023/2024.

3. Breakdown of Key Drivers

1. Revenue Growth Factors
   • Improved economic activity during the year, particularly in key sectors like trade and services.
   • Strengthened tax administration and enforcement measures by TRA.
2. Efficiency in Exceeding Targets
   • Enhanced compliance through digital tax systems (e.g., EFDs).
   • Improved taxpayer education and monitoring contributed to high revenue performance.
3. Month-on-Month Trends
   • The largest revenue collection occurred in December 2024 (TZS 3.587 trillion), likely due to increased economic activity during the holiday season.
   • July 2024 saw a strong start with significant growth and efficiency, setting the pace for subsequent months.

4. Highlights and Takeaways

• Consistent Growth: Revenue growth ranged from 15% to 23.6%, demonstrating resilience in collections despite possible economic challenges.
• Exceeding Targets: TRA consistently achieved over 100% efficiency, showing effective planning and execution.
• Peak Collection: December was the strongest month in absolute collections, reflecting seasonal economic patterns.

Forecast for revenue collections by the Tanzania Revenue Authority (TRA) for the next six months (January–June 2025), based on the average growth rate observed between July and December 2024/2025:

Key Observations:

1. January 2025: Forecasted collections are TZS 3.97 trillion, an increase from December 2024 due to consistent growth momentum.
2. June 2025: Collections are projected to reach TZS 6.60 trillion, reflecting significant month-on-month growth.
3. Trend: Revenue is expected to grow steadily due to sustained improvements in tax compliance and economic activities.

Tanzania Revenue Authority (TRA) for July–December 2024/2025 and the forecast for January–June 2025 offers key insights into the efficiency, growth, and trends of revenue collections:

1. Efficiency (Target Achievement)

• TRA consistently exceeded revenue targets, achieving efficiency rates above 100% across all months, with a peak of 107.45% in October 2024.
• This indicates robust tax collection strategies, improved taxpayer compliance, and effective administrative measures.
• Even in December, where targets are typically ambitious, TRA managed to collect 3.587 trillion TZS, surpassing the target by 3.52%.

2. Growth (Year-on-Year Comparison)

• Revenue collections showed steady growth compared to the previous fiscal year, ranging from 15.01% in September to a high of 23.60% in October.
• The high growth rates suggest:
  • Strengthened economic activity, particularly in trade and services.
  • Enhanced enforcement of tax compliance and digital systems like EFDs.

3. Seasonal Trends and Peaks

• July 2024: Marked a strong start with 21.04% growth, setting a positive trajectory for subsequent months.
• December 2024: Registered the highest collections in absolute terms (3.587 trillion TZS), attributed to increased holiday-related economic activity.

4. Key Drivers Behind Performance

• Economic Growth: Expansion in key sectors such as trade and services contributed to rising tax revenues.
• Technological Integration: Use of digital tax systems and improved enforcement mechanisms enhanced compliance.
• Taxpayer Education: Increased awareness among taxpayers likely reduced evasion and improved voluntary compliance.

5. Forecast for January–June 2025

• Forecasted collections project sustained growth, with revenues rising from 3.97 trillion TZS in January to 6.60 trillion TZS in June 2025.
• The steady increase indicates momentum in tax collection strategies and economic performance.
• By June 2025, collections are expected to reflect nearly 66% growth compared to January 2025, showcasing robust monthly expansion.

6. Overall Insights

1. Consistency in Exceeding Targets: TRA’s ability to consistently exceed revenue targets demonstrates strong institutional efficiency.
2. Sustained Growth: Growth rates of 15–23.6% suggest resilience in economic activities despite potential challenges.
3. Strategic Focus: December’s peak collections and the upward forecast highlight the importance of seasonal and economic patterns in TRA’s strategies.
4. Future Prospects: The optimistic forecast for January–June 2025 underscores TRA's capability to leverage momentum and maintain revenue collection growth.

Remittance flows play a pivotal role in Tanzania's economic landscape, contributing $757 million in inward remittances in 2024, equivalent to 1.0% of GDP. While the country lags behind regional peers such as Kenya and Uganda, these private transfers offer a stable source of foreign exchange and household income. With modest outward remittances of $161 million, Tanzania remains a net recipient, highlighting opportunities to strengthen diaspora engagement and leverage remittances for sustainable development. This comparative regional analysis underscores the untapped potential to enhance financial inclusion, promote labor mobility, and foster economic resilience.

Inward Remittance Flows:

• 2024 Estimated Inflows: Tanzania received approximately $757 million, contributing to 1.0% of GDP.
• Comparative Position in East Africa:
  • Kenya received $4,800 million (4.6% of GDP).
  • Uganda received $1,492 million (2.6% of GDP).
  • Rwanda received $537 million (3.9% of GDP).
  • Burundi received $49 million (1.6% of GDP).

Tanzania ranks lower in absolute remittance inflows compared to Kenya and Uganda but surpasses Rwanda and Burundi. The proportion of remittances relative to GDP (1.0%) suggests moderate reliance compared to Kenya (4.6%) or Uganda (2.6%)​.

Outward Remittance Flows:

• 2023 Outflows: Tanzania recorded remittance outflows of $161 million, equating to 0.2% of GDP.
• Comparative Position in East Africa:
  • Kenya had outflows of $40 million (minimal, 0.0% of GDP).
  • Uganda had outflows of $218 million (0.4% of GDP).
  • Rwanda had outflows of $94 million (0.7% of GDP).
  • Burundi had outflows of $16 million (0.4% of GDP).

Tanzania's outward remittances are moderate among East African peers, with higher outflows than Kenya but lower than Uganda​.

Insights and Context:

1. Inward Remittances:
   • Key Source of Foreign Exchange: Moderate contribution to Tanzania's economy, reflecting a growing diaspora engagement but trailing behind Kenya and Uganda.
   • Potential for Growth: With improved diaspora engagement strategies and reduced transaction costs, Tanzania can enhance remittance inflows.
2. Outward Remittances:
   • Reflecting Increased Labor Movements: Outflows signify Tanzanian expatriates and foreign nationals sending funds abroad.
   • Balance with Inflows: The country maintains a favorable net remittance position, with inflows significantly higher than outflows.

Tanzania’s strategic focus could involve:

• Strengthening financial inclusivity to capture more remittances.
• Enhancing bilateral agreements to facilitate smoother remittance channels.
• Promoting investment opportunities for the diaspora to convert remittances into economic growth.

Key Implications of Remittance Flows

1. Diaspora Contributions

• Inward Remittances: At $757 million (1.0% of GDP) in 2024, remittances highlight the economic contributions of Tanzanians abroad. Although the volume is lower than peers like Kenya and Uganda, it still represents a stable source of foreign exchange and household income for recipients.
• Opportunity: With better diaspora engagement and reduced costs of money transfers, Tanzania can harness this resource to boost economic resilience and poverty reduction.

2. Limited Reliance Compared to Neighbors

• Kenya (4.6% of GDP) and Uganda (2.6% of GDP) are far more dependent on remittances relative to GDP. Tanzania's lower percentage suggests:
  • A less mature remittance market, with scope for growth.
  • Economic diversification, reducing dependence on external flows compared to peers.

3. Outward Remittances: Evidence of Regional Integration

• Tanzania's $161 million outflows (0.2% of GDP) reflect:
  • Cross-border labor movements, with Tanzanian expatriates working in other countries.
  • Presence of foreign nationals in Tanzania who remit earnings home.

This indicates regional and global labor market integration, although the scale of outflows remains modest compared to inflows.

4. Economic Development Indicator

• Inward Focus: A growing remittance inflow indicates increasing engagement with the diaspora and improvements in financial systems to capture these flows.
• Outward Focus: Moderate outward flows suggest that Tanzania is a net recipient of remittances, which is typical for developing economies. However, outflows may grow with increased labor migration and regional trade integration.

Regional Position

• Kenya dominates East Africa in remittance inflows due to a well-established and globally dispersed diaspora, along with efficient remittance channels.
• Tanzania's Moderate Rank: It holds a middle position in the region, above smaller economies like Burundi and Rwanda but behind Kenya and Uganda. This reflects the potential for Tanzania to grow its influence in regional labor markets and attract more remittances.

Policy and Strategy Implications

1. Financial Inclusion & Infrastructure:
   • Encourage the use of formal remittance channels by improving accessibility to banking and mobile money services.
   • Negotiate lower transaction costs with international financial institutions.
2. Diaspora Engagement:
   • Launch programs to strengthen connections with Tanzanians abroad, encouraging investments and remittances.
3. Domestic Investment Opportunities:
   • Offer attractive incentives for the diaspora to invest in productive sectors such as real estate, agriculture, and technology.
4. Labor Export Programs:
   • Promote skilled labor migration through agreements with countries seeking workers, particularly in sectors like healthcare, education, and construction.

What It Tells About Tanzania's Future

The remittance data suggests Tanzania has untapped potential to:

• Leverage its diaspora for economic development.
• Enhance its role in regional labor markets.
• Develop policies that reduce reliance on external aid by maximizing stable, private flows like remittances.

The banking and finance sector in Tanzania is undergoing a remarkable transformation. Anchored by digital innovation, regulatory reforms, and increased financial inclusivity, this sector is driving significant economic growth. An exploration of its current landscape, challenges, and opportunities.

Sector Growth and Digital Transformation

By 2024, Tanzania's banking assets reached TZS 43 trillion (USD 18 billion), equivalent to 20% of the GDP. This growth has been powered by a surge in mobile banking, which saw a 116% increase in mobile accounts between 2019 and 2024. As of 2024, mobile money accounts exceeded 55.8 million, with monthly transactions surpassing 310 million. By 2030, these accounts are projected to grow to 90 million, marking a pivotal shift towards digital financial services.

Financial Inclusivity

The financial inclusion rate in Tanzania rose from 16% in 2009 to 70% in 2024, driven by mobile and microfinance services. Urban areas boast 85% financial access, but rural regions lag at 55%, reflecting significant disparities. The government aims for a 75% inclusion rate by 2025 and an ambitious 90% by 2030.

Challenges in the Sector

Despite the impressive growth, Tanzania’s banking sector faces critical challenges:

• High Compliance Costs: Stringent regulations have increased operational expenses by 20%, impacting profitability.
• Rural Access: A lack of physical bank branches in rural areas leaves many reliant on mobile banking.
• Lending Rates: High average interest rates (16%) restrict SMEs' access to affordable credit, stifling private sector growth.

Opportunities for Investment

1. Digital and Mobile Banking: Projected to grow at 12% annually, this sector offers vast potential for fintech and infrastructure investments.
2. SME Financing: With SMEs comprising over 90% of businesses but only 16% accessing formal finance, the loan market is poised for a 10% annual growth.
3. Green Financing: This emerging sector, targeting eco-friendly projects, is expected to grow by 15% yearly, particularly in agriculture and renewable energy.

Future Outlook

By 2030, Tanzania’s banking landscape will likely host 60-65 banks, with microfinance representing 30% of total assets. With streamlined regulations and targeted digital literacy programs, financial inclusivity could rise to 85-90%. Investment in key sectors like digital banking, SME financing, and green financing is anticipated to create a competitive, resilient, and inclusive banking environment.

Conclusion

Tanzania’s banking sector is at the cusp of transformative growth. Addressing compliance challenges, bridging urban-rural disparities, and fostering innovations in digital finance will be critical. With the right investments and policy adjustments, the sector is well-positioned to drive inclusive economic development and solidify Tanzania's leadership in East Africa's financial landscape.

Introduction

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

Key Achievements and Challenges

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

Figure 1: Tax Contribution by Sector

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

Future Projections and Policy Recommendations

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

Figure 2: 2030 Projections

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

Conclusion

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

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

Current Employment Dynamics

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

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

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

Formalization’s Role in Economic Development

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

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

Sectoral Transformation

By 2030, formal sector employment is expected to diversify:

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

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

Challenges in Formalization

Tanzania faces several obstacles in its formalization journey:

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

Regional and Demographic Insights

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

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

Policy Recommendations

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

Future Projections

Future Projections Summary:

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

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

Conclusion

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

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

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

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

Major Projects and Their Impact

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

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

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

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

Recommendations for Strengthening Tanzania’s PPPs

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

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

Regional and Continental Insights

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

Tanzania's Position in East Africa

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

Tanzania:

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

East African Peers:

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

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

Tanzania's Position in Africa

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

Top African Economies:

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

Comparable Countries:

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

Key Figures:

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

Insights

1. Tanzania’s Growing Dependence on IMF Support

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

2. Regional Competitiveness (East Africa)

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

3. Tanzania’s Position in Africa

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

4. Economic Implications

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

Broader Themes for Tanzania

1. Growth Potential

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

2. Caution on Debt Management

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

3. Leadership in East Africa

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

Conclusion

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

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

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

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

1. Headline Inflation

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

2. Food and Non-Alcoholic Beverages

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

Significant food price increases (October–November 2024):

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

3. Core Inflation

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

4. Non-Food Items

Significant price increases (October–November 2024):

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

5. Energy, Fuel, and Utilities

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

6. Services, Goods, and Education Indices

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

Analysis of Inflation Trends

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

Implications

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

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

1. Inflation Stability

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

2. Food Price Pressures

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

3. Rising Costs of Essentials

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

4. Energy and Utilities

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

5. Broader Economic Trends

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

Key Takeaways

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

Conclusion

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

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

Overall Index Performance

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

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

Manufacturing Sector

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

Other Major Sectors

Mining and Quarrying

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

Electricity, Gas, Steam, and Air Conditioning

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

Water Supply & Waste Management

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

Year-over-Year Standout Performers

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

Biggest Year-over-Year Declines

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

Key Insights

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

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

1. Positive Overall Growth

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

2. Manufacturing is the Key Driver

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

3. Uneven Sectoral Performance

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

4. Year-over-Year Declines in Traditional Industries

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

5. A Dynamic Shift in Industrial Focus

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

6. Challenges to Address

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

7. Strategic Implications

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

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

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

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

1. Total Assets

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

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

2. Major Asset Components

a. Foreign Currency Marketable Securities

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

b. Cash and Cash Equivalents

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

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

c. Advances to Government

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

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

3. Total Liabilities

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

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

4. Major Liability Components

a. Currency in Circulation

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

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

b. Foreign Currency Financial Liabilities

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

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

c. Bank and Non-Bank Financial Institution Deposits

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

5. Equity Position

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

Breakdown:

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

6. Notable Changes and Observations

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

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

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

1. Liquidity Pressures and Operational Adjustments

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

2. Increased Government Financing

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

3. Stable Domestic Economic Activity

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

4. Improved Management of External Obligations

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

5. Decline in Equity Reflects Tight Financial Conditions

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

6. Overall Economic Implications

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

Key Concerns

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

Conclusion

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