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Navigating 2025 with USD 35.51B External and TZS 34.76T Domestic Burden Under a 46.7% Debt-to-GDP Ratio

Tanzania’s combined external debt of USD 35.51 billion and domestic debt of TZS 34,759.9 billion as of April 2025 supports critical sectors like infrastructure (21.5% of external debt) and social welfare (19.9%), driving economic growth projected at 6% for 2025. The IMF’s assessment of moderate external debt distress risk and a public debt-to-GDP ratio of 46.7% in 2022/23 (well below the 55% benchmark) indicate a sustainable debt profile, but rising borrowing and a TZS 284.3 billion budget deficit in March 2025 necessitate careful management to maintain economic resilience. Key issues include high debt servicing costs, exchange rate risks (TZS depreciated 3.9% to 2,684.41/USD), and limited revenue diversification. Strategies such as enhancing domestic revenue mobilization, prioritizing concessional borrowing, improving debt management, and diversifying exports can balance borrowing with sustainability, ensuring resilience against shocks while supporting Vision 2050’s growth targets.

Main Key Issues

  1. Debt Levels and Sectoral Support
    • Debt Composition: As of April 2025, external debt stands at USD 35,505.9 million, with 76.7% (USD 27,224.0 million) held by the central government and 23.3% (USD 8,278.1 million) by the private sector. Domestic debt is TZS 34,759.9 billion (USD ~12.95 billion at TZS 2,684.41/USD), up 9.2% from TZS 31,836.5 billion in April 2024. Combined, this equals ~USD 48.46 billion, or ~61.2% of 2024 GDP (USD 79.2 billion), higher than the 46.7% public debt-to-GDP ratio in 2022/23.
    • Sectoral Allocation: External debt supports transport and telecommunications (21.5%, ~USD 7,633.8 million), balance of payments and budget support (20.2%, ~USD 7,172.2 million), and social welfare and education (19.9%, ~USD 7,065.7 million). Domestic debt finances recurrent costs (e.g., TZS 833.3 billion for wages in March 2025) and development projects (TZS 1,406.7 billion, 41.7% of expenditure). These investments drive infrastructure (e.g., Standard Gauge Railway) and human capital, critical for 6% GDP growth.
    • Sustainability Metrics: The IMF’s moderate external debt distress risk reflects a debt-to-GDP ratio below 55% and reserves of USD 5.3 billion (4.3 months of import cover). However, TICGL note a rise in external debt from USD 32.09 billion in January 2025, signaling increased borrowing pressure. The debt service-to-export ratio (16.2% in 2024/25) remains manageable but requires vigilance.
  2. High Debt Servicing Costs
    • External Debt Servicing: With 67.4% of external debt (USD 23,931 million) in USD, servicing costs are estimated at ~USD 2.4 billion annually (assuming 6.7% average interest rate). In 2024/25, external debt service was USD 1,427.1 million, up from USD 1,224.3 million in 2023/24, straining reserves. Interest arrears are low (USD 78.0 million for central government, 0.2%), but private sector arrears (USD 1,637.0 million, 4.6%) indicate repayment challenges.
    • Domestic Debt Servicing: Domestic debt servicing reached TZS 890.9 billion in February 2025, with interest payments in March 2025 at ~TZS 300.0 billion (previous responses). This competes with development spending (TZS 1,406.7 billion), limiting fiscal space. TICGL note domestic debt servicing at TZS 2,364.3 billion in 2022/23, highlighting its fiscal burden.
    • Impact on Resilience: High servicing costs reduce funds for social programs and infrastructure, increasing reliance on borrowing (e.g., TZS 519.6 billion in Treasury bonds, previous responses). The Monthey Economic Review notes a fiscal deficit target below 3% of GDP, but the TZS 284.3 billion deficit in March 2025 suggests ongoing financing needs.
  3. Exchange Rate Risks and Currency Exposure
    • TZS Depreciation: The TZS depreciated 3.9% annually to TZS 2,684.41/USD in April 2025, increasing the cost of USD-denominated debt servicing by ~TZS 2,471.6 billion (23,931 million × 2,684.41 × 3.9%). The BoT’s interventions (USD 6.25 million sold in IFEM) and reserves mitigate volatility, but note a 29% TZS weakening from 2014–2024, amplifying debt costs.
    • Currency Composition: External debt’s 67.4% USD share, 16.8% Euro, and 6.3% Yuan expose Tanzania to currency risks, especially with a stronger USD (1 USD = TZS 2,655.59 in June 2025). Domestic debt in TZS avoids currency risk but faces inflation pressures (3.3% in March 2025, previous responses).
    • Trade Implications: Depreciation boosts export competitiveness (e.g., agriculture, 5.1% of external debt use), but higher import costs (USD 17,511.8 million in February 2025) and debt servicing strain reserves, reducing economic resilience. The current account deficit of USD 2,224.9 million, though improved by 18.6%, reflects external pressures (previous responses).
  4. Limited Revenue Diversification
    • Revenue Performance: Tax revenue in March 2025 reached TZS 2,603.3 billion (2% above target), but non-tax revenue underperformed at TZS 350.5 billion against TZS 522.4 billion, contributing to a TZS 3,090.8 billion total revenue (96.9% of TZS 3,190 billion target). The tax-to-GDP ratio (11.8% in 2022/23) is below the 15% Sub-Saharan Africa average, limiting debt repayment capacity.
    • Dependence on Taxes: Taxes constitute 84.2% of revenue (2,603.3 / 3,090.8 × 100), with non-tax TICGL (e.g., dividends, fees) contributing only 11.3% TICGL highlight inefficiencies in public enterprise dividends, constraining fiscal space for debt servicing and development spending.
    • Resilience Risks: Limited revenue diversification increases reliance on borrowing to fund the TZS 284.3 billion deficit, with domestic debt held by commercial banks (TZS 10,049.9 billion, 28.9%) and external loans (e.g., IMF’s USD 440.8 million). This heightens vulnerability to shocks, as seen in the private sector’s USD 1,637.0 million arrears.

Strategies to Balance Borrowing with Debt Sustainability

  1. Enhance Domestic Revenue Mobilization
    • Action: Increase the tax-to-GDP ratio to 13% by 2026 through broader tax base (e.g., informal sector, ~3 million taxpayers) and digital tax systems (EFDs). Target TZS 500 billion annually from non-tax TICGL by improving public enterprise dividends (e.g., TANESCO) and introducing carbon credits, covering ~17.6% of the March 2025 deficit (500 / 2,843 × 100).
    • Impact: Additional TZS 1,000 billion (tax + non-tax) could reduce borrowing needs, lowering domestic debt growth (9.2% in 2025) and servicing costs (TZS 890.9 billion in February 2025). This aligns with IMF recommendations for revenue reforms and supports social welfare spending (19.9% of external debt).
  2. Prioritize Concessional Borrowing
    • Action: Secure concessional loans (e.g., World Bank, IMF’s ECF USD 1,046.4 million) for 80% of new external borrowing, targeting USD 2 billion annually at <2% interest rates. Limit commercial loans (36.3% of external debt) to reduce servicing costs, saving ~USD 200 million annually (8% of USD 2.4 billion).
    • Impact: Concessional loans lower debt distress risk, freeing funds for infrastructure (21.5% of external debt) and maintaining reserves (USD 5.3 billion). This supports the Monthey Economic Review’s fiscal discipline and IMF’s moderate risk assessment.
  3. Improve Debt Management and Transparency
    • Action: Strengthen the Debt Management Office to monitor debt-to-GDP (46.7% in 2022/23) and debt service-to-export ratios (16.2%). Publish quarterly debt reports and hedge 20% of USD debt (USD 4.79 billion) against TZS depreciation, saving ~TZS 494.8 billion annually at 3.9% depreciation. Clear private sector arrears (USD 1 billion of USD 1.637 billion) to boost investor confidence.
    • Impact: Reduced arrears and transparency attract FDI (e.g., USD 1.4 billion for rail, supporting reserves and TZS stability (2,684.41/USD). This could fund TZS 1,406.7 billion in development spending, enhancing resilience against shocks like DRC conflict (USD 3).
  4. Diversify Exports to Boost Foreign Exchange
    • Action: Invest 5.1% of external debt (USD 1,810.4 million) and tourism receipts (USD 3,842.6 million) in agriculture and manufacturing (3.9% of external debt) to increase exports by 20% to USD 20.1 billion by 2027 (from USD 16,737.6 million in 2025). Promote value-added agriculture (e.g., processed coffee) under AfCFTA and agreements with UAE.
    • Impact: Higher exports reduce the current account deficit (USD 2,224.9 million) and USD demand, stabilizing TZS and reserves. A USD 1 billion export increase lowers the debt-to-export ratio by ~1%, supporting sustainability and resilience, aligning with Vision 2050.

Conclusion

Tanzania’s combined external (USD 38 billion) and domestic (TZS 35,768.5 billion) debt supports critical sectors but requires balanced borrowing to maintain sustainability, given a 46.7% debt-to-GDP ratio in 2025 and moderate IMF risk assessment. Key issues include high servicing costs (~USD 2.4 billion external, TZS 896.9 billion domestic), exchange rate risks (TZS 2,684.57/USD, 3.3% depreciation, limited revenue (TZS 3,060.8 billion in March 2025), and export dependence. Strategies like revenue mobilization (TZS 1,000 billion target), concessional borrowing (USD 2 billion), debt management, and export diversification (USD 20.1 billion by 2027) can reduce borrowing needs, stabilize TZS, and enhance resilience, supporting 6% GDP growth and Vision 2050.

The following table summarizes these key figures.

CategoryMetricValue
Debt LevelsExternal Debt (April 2025)USD 35,505.9 million (~61.2% of 2024 GDP)
Domestic Debt (April 2025)TZS 34,759.9 billion (~USD 12.95 billion)
Public Debt-to-GDP (2022/23)46.7%
Sectoral AllocationExternal Debt: Transport & Telecom21.5% (~USD 7,633.8 million)
External Debt: Social Welfare & Education19.9% (~USD 7,065.7 million)
Development Expenditure (March 2025)TZS 1,406.7 billion (41.7%)
Debt ServicingExternal Debt Service (2024/25)USD 1,427.1 million
Domestic Debt Service (Feb 2025)TZS 890.9 billion
External Interest Arrears (Private Sector)USD 1,637.0 million (4.6%)
Exchange RateTZS/USD (April 2025)TZS 2,684.41/USD (↓ 3.9%)
Foreign ReservesUSD 5.3 billion (4.3 months cover)
Fiscal ContextBudget Deficit (March 2025)TZS 284.3 billion (~8.4% of expenditure)
Tax Revenue (March 2025)TZS 2,603.3 billion (2% above target)
Non-Tax Revenue ShortfallTZS 171.9 billion (67.1% of TZS 522.4 billion)
Trade ContextCurrent Account DeficitUSD 2,224.9 million (↑ 18.6%)
Total Exports (Feb 2025)USD 16,737.6 million (↑ 18.8%)
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How TZS 1.41 Trillion Development Spending in March 2025 Drives Human Capital Despite USD 35.51 Billion Debt

Tanzania’s public expenditure in March 2025, totaling TZS 3,375.1 billion, allocates 41.7% (TZS 1,406.7 billion) to development projects and 58.3% (TZS 1,968.4 billion) to recurrent spending, reflecting a moderate commitment to inclusive growth but constrained by high recurrent costs. The emphasis on social welfare and education, which receives 19.9% (~USD 7,065.7 million) of the USD 35,505.9 million external debt, supports human capital development, critical for equitable growth. However, the dominance of recurrent spending, including TZS 833.3 billion for wages and TZS 300.0 billion for interest payments, limits reTICGL for transformative investments, contributing to a TZS 284.3 billion deficit. Key issues include the imbalance between recurrent and development spending, underinvestment in human capital, and fiscal constraints. Strategies such as reallocating recurrent funds, prioritizing human capital investments, enhancing public expenditure efficiency, and leveraging external financing can optimize spending, fostering inclusive growth and aligning with Tanzania’s Vision 2050 and 6% GDP growth projection for 2025.

Main Key Issues

  1. Imbalance Between Recurrent and Development Spending
    • Expenditure Allocation: In March 2025, total expenditure of TZS 3,375.1 billion was split into 41.7% (TZS 1,406.7 billion) for development projects and 58.3% (TZS 1,968.4 billion) for recurrent spending, including wages (TZS 833.3 billion), interest payments (~TZS 300.0 billion), and other recurrent costs (TZS 835.1 billion). The Monthey Economic Review notes a fiscal deficit target below 3% of GDP, but the TZS 284.3 billion deficit (8.4% of expenditure) indicates fiscal pressure.
    • Development Spending: The TZS 1,406.7 billion for development projects supports infrastructure (e.g., Standard Gauge Railway, 21.5% of external debt use), health, and education, aligning with the Third Five-Year Development Plan (2021/22–2025/26) for 8% GDP growth by 2026. However, its 41.7% share is lower than the 50%+ recommended for developing economies to drive structural transformation, limiting inclusive growth.
    • Recurrent Spending Dominance: Recurrent spending’s 58.3% share, driven by a wage bill covering 1.2 million public servants and domestic debt servicing (TZS 890.9 billion in February 2025), crowds out development investments.  TICGL note recurrent expenditure at 62% of the 2024/25 budget (TZS 49.35 trillion), highlighting a structural bias toward short-term obligations.
    • Impact on Inclusive Growth: The imbalance constrains investments in poverty reduction (26.4% poverty rate in 2022) and job creation (unemployment ~10%), key for inclusive growth. The Monthey Economic Review emphasizes infrastructure and human capital for equitable development, but recurrent costs limit scalability.
  2. Underinvestment in Human Capital
    • Current Allocation: Social welfare and education receive 19.9% (~USD 7,065.7 million) of external debt (USD 35,505.9 million), funding initiatives like free secondary education and health infrastructure. However, only a portion of the TZS 1,406.7 billion development expenditure targets human capital, as infrastructure (21.5%) and budget support (20.2%) dominate external debt use (previous responses). Health and education budgets are ~7% and 15% of the 2024/25 budget, below UNESCO’s 20% and WHO’s 15% benchmarks.
    • Human Capital Gaps: Tanzania’s Human Capital Index (HCI) is 0.40, below the Sub-Saharan Africa average of 0.48, with secondary completion rates at 30% and maternal mortality at 556 per 100,000 births. Low skills constrain productivity in agriculture (26% of GDP, 65.51% employment) and manufacturing (9% of GDP). The Monthey Economic Review notes education and health as Vision 2025 priorities.
    • Tourism Link: Tourism receipts (USD 3,842.6 million from 2,162,487 arrivals in April 2025) could fund human capital, but only ~10% (USD 384.3 million) is estimated as tax revenue (previous responses), insufficient to close gaps without reallocation from recurrent spending.
    • Impact on Growth: Underinvestment limits inclusive growth, as unskilled labor reduces competitiveness in AfCFTA markets (ratified 2022). TICGL highlight the need for skilled workers to achieve 6% GDP growth.
  3. Fiscal Constraints and Revenue Limitations
    • Revenue Shortfall: Total revenue in March 2025 was TZS 3,090.8 billion (96.9% of TZS 3,190 billion target), with tax revenue at TZS 2,603.3 billion (2% above target) but non-tax revenue at TZS 350.5 billion (67.1% of TZS 522.4 billion), creating a TZS 171.9 billion gap (previous responses). The tax-to-GDP ratio (11.8% in 2022/23) is below the 15% Sub-Saharan average, limiting fiscal space.
    • Deficit Financing: The TZS 284.3 billion deficit was likely financed through domestic borrowing (TZS 34,759.9 billion, up 9.2%) or external loans (USD 35,505.9 million, previous responses), increasing debt servicing costs (USD 1,427.1 million external, TZS 890.9 billion domestic in 2024/25). This reduces funds for human capital development.
    • External Support: IMF’s Extended Credit Facility (USD 1,046.4 million) and World Bank’s human capital projects supplement spending, but reliance on borrowing risks sustainability, with a 46.7% debt-to-GDP ratio in 2022/23.
    • Resilience Risks: Limited revenue and high recurrent costs heighten vulnerability to shocks (e.g., DRC conflict), undermining inclusive growth. The Monthey Economic Review stresses fiscal discipline.

Strategies to Optimize Spending for Human Capital Development

  1. Reallocate Recurrent Spending to Human Capital
    • Action: Reduce recurrent spending by 5% (TZS 98.4 billion from TZS 1,968.4 billion) through wage bill reforms (e.g., freezing non-essential hiring) and redirect to education and health. Fund teacher training (10,000 teachers at TZS 10 million/year, TZS 100 billion) and 50 clinics (TZS 8 billion each, TZS 400 billion).
    • Impact: This increases development spending to 44.6% (1,505.1 / 3,375.1 × 100), boosting HCI by ~0.02 points. Improved education and health enhance labor productivity, supporting 6% GDP growth and reducing poverty (26.4%). Aligns with IMF’s call for social spending.
  2. Prioritize Human Capital in Development Budget
    • Action: Allocate 30% of development expenditure (TZS 422.0 billion of TZS 1,406.7 billion) to education and health, doubling their share from ~15%. Invest in vocational training (100,000 youth at TZS 5 million each, TZS 500 billion) and maternal health (20 hospitals at TZS 10 billion, TZS 200 billion).
    • Impact: This could raise secondary completion to 40% and lower maternal mortality to 400 per 100,000, aligning with World Bank’s 2025–2029 framework. Skilled workers boost manufacturing (3.9% of external debt use), fostering inclusive growth. Tourism receipts (USD 384.3 million tax) can co-fund (previous responses).
  3. Enhance Public Expenditure Efficiency
    • Action: Implement performance-based budgeting to ensure 90% of TZS 1,406.7 billion development funds reach intended projects, saving ~TZS 140.7 billion (10% inefficiency). Use digital tracking (e.g., EFDs) to monitor spending and reduce leakages.
    • Impact: Savings fund 10,000 scholarships (TZS 10 million each, TZS 100 billion), increasing tertiary enrollment (8% in 2023). Efficient spending supports fiscal sustainability (46.7% debt-to-GDP), reducing borrowing needs (TZS 34,759.9 billion domestic debt).
  4. Leverage External Financing for Human Capital
    • Action: Secure USD 500 million in concessional loans from World Bank/IMF for education and health, supplementing 19.9% of external debt (USD 7,065.7 million). Co-finance with tourism taxes (USD 384.3 million) to build 100 schools (TZS 5 billion each, TZS 500 billion).
    • Impact: This increases human capital investment by ~7% (500 / 7,065.7 × 100), supporting AfCFTA competitiveness. Concessional loans maintain moderate debt distress risk, ensuring resilience against shocks.

Conclusion

Tanzania’s March 2025 expenditure allocation of 41.7% (TZS 1,406.7 billion) to development projects and 58.3% (TZS 1,968.4 billion) to recurrent spending reflects a partial commitment to inclusive growth, constrained by high wage (TZS 833.3 billion) and debt servicing costs (TZS 890.9 billion in February 2025). The 19.9% external debt use for social welfare (~USD 7,065.7 million) supports human capital, but underinvestment (HCI 0.40) and fiscal constraints (TZS 284.3 billion deficit) limit equity. Key issues include spending imbalance, human capital gaps, and revenue shortfalls (TZS 171.9 billion non-tax). Strategies like reallocating recurrent funds, prioritizing human capital, enhancing efficiency, and leveraging external financing can optimize spending, boosting education, health, and 6% GDP growth, ensuring inclusive growth per Vision 2050.

The following table summarizes these key figures.

CategoryMetricValue
Public ExpenditureTotal Expenditure (March 2025)TZS 3,375.1 billion
Development ExpenditureTZS 1,406.7 billion (41.7%)
Recurrent ExpenditureTZS 1,968.4 billion (58.3%)
– WagesTZS 833.3 billion
– Interest Payments (Estimate)~TZS 300.0 billion
Human Capital InvestmentExternal Debt for Social Welfare & Education19.9% of USD 35,505.9 million (~USD 7,065.7 million)
Health Budget (2024/25 Estimate)~7% of TZS 49.35 trillion
Education Budget (2024/25 Estimate)~15% of TZS 49.35 trillion
Fiscal ContextBudget Deficit (March 2025)TZS 284.3 billion (~8.4% of expenditure)
Total RevenueTZS 3,090.8 billion (96.9% of TZS 3,190 billion target)
Tax RevenueTZS 2,603.3 billion (2% above target)
Non-Tax Revenue ShortfallTZS 171.9 billion (67.1% of TZS 522.4 billion)
Economic ContextDebt-to-GDP (2022/23)46.7%
GDP Growth Projection (2025)6%
Tourism Receipts (April 2025)USD 3,842.6 million (Potential Tax: USD 384.3 million)
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In 2025, Tanzania maintains economic stability with a 3.2% headline inflation, a 5% target, and a 557K-tonne food stock buffer

In May 2025, the Bank of Tanzania’s medium-term inflation target of 5% remains a cornerstone for fostering sustainable economic development, balancing price stability with robust growth. According to the "Monthey Economic Review," headline inflation stood at a stable 3.2% in April 2025, down from 3.3% in March, aligning well within the 5% target and regional benchmarks of the East African Community (EAC) and Southern African Development Community (SADC). However, challenges persist with food inflation rising to 5.3% due to weather-induced supply volatility, prompting the National Food Reserve Agency (NFRA) to bolster food stocks to 557,228 tonnes, up from 340,102 tonnes in April 2024, and release 29,834 tonnes of maize to stabilize markets. The Central Bank Rate (CBR) held steady at 6%, supporting economic activity while addressing global uncertainties, such as a projected 2.8% global growth rate and a 6.7% decline in crude oil prices. This introduction explores how these figures reflect Tanzania’s efforts to maintain economic stability and the challenges in sustaining the 5% inflation target.

Alignment with Sustainable Economic Development Objectives

The Bank of Tanzania’s monetary policy objectives, are to maintain price stability (defined as a low and stable inflation rate over time) and support economic growth. The 5% medium-term inflation target aligns with these goals in the following ways:

  1. Price Stability for Economic Predictability:
    • A stable inflation rate of around 5% fosters predictability in the economy, which is critical for sustainable development. Low and stable inflation ensures that businesses and consumers can plan investments and expenditures without the uncertainty of volatile price changes.
    • Figure: The document notes that headline inflation in April 2025 was 3.2%, well within the 5% target. This indicates that the Bank’s policy has been effective in maintaining inflation below the medium-term goal, creating a stable environment for economic planning.
    • By keeping inflation within the East African Community (EAC) and Southern African Development Community (SADC) benchmarks, Tanzania enhances its regional competitiveness, attracting investment and supporting trade integration, which are vital for long-term growth.
  2. Supporting Economic Growth:
    • The 5% target strikes a balance between controlling inflation and allowing room for economic expansion. Excessively low inflation could stifle growth by limiting monetary flexibility, while high inflation erodes purchasing power and deters investment.
    • Figure: The Monetary Policy Committee’s decision to maintain the Central Bank Rate (CBR) at 6% in April 2025 reflects a strategy to support economic activities while keeping inflation in check. The document states this decision aims to maintain inflation within the 3.5% medium-term target (short-term adjustment) and smooth exchange rate volatility, which supports growth by stabilizing the cost of imports and exports.
    • Stable inflation supports consumer purchasing power, as evidenced by the decline in core inflation to 2.2% in April 2025 from 3.9% in April 2024. This reduction in underlying price pressures enhances affordability, boosting consumption and economic activity.
  3. Food Security and Cost of Living:
    • Sustainable economic development requires affordable access to basic goods, particularly food. The 5% inflation target helps manage food inflation, which rose to 5.3% in April 2025, driven by high staple food crop prices due to weather-induced supply volatility. By aiming to keep overall inflation at 5%, the Bank mitigates the risk of runaway food prices, which could disproportionately affect low-income households.
    • Figure: The National Food Reserve Agency (NFRA) increased food stocks to 557,228 tonnes by April 2025 from 340,102 tonnes in April 2024, supporting food price stabilization. This aligns with the inflation target by ensuring supply-side interventions complement monetary policy, fostering inclusive growth.
  4. Exchange Rate Stability and External Sector:
    • A stable inflation rate supports exchange rate stability, which is crucial for Tanzania’s external sector performance and economic development. The document highlights the Bank’s focus on smoothing exchange rate volatility, which reduces uncertainty for exporters and importers.
    • Figure: The global economic context, including a 6.7% decline in crude oil prices, could ease pressure on Tanzania’s import bill, supporting the external sector. Maintaining inflation at 5% ensures that exchange rate stability translates into predictable costs for trade, fostering export-led growth and foreign exchange reserve accumulation (e.g., leveraging gold exports, with prices at USD 3,000 per troy ounce in April 2025).

Challenges in Maintaining the 5% Inflation Target

Despite the alignment with sustainable development, maintaining the 5% inflation target poses several challenges, as inferred from the document’s data and context:

  1. Food Price Volatility:
    • Challenge: Food inflation rose to 5.3% in April 2025, exceeding the 5% target. The document attributes this to weather-induced supply volatility and logistics challenges, which are difficult to control through monetary policy alone.
    • Impact: High food inflation, as a significant component of the Consumer Price Index (CPI), could push headline inflation above the target, undermining purchasing power and economic stability. For example, Non-core inflation (including food) rising to 5.7% in April 2025, indicating persistent pressure from volatile components.
    • Mitigation: The NFRA’s release of 29,834 tonnes of maize helps stabilize supply, but sustained weather disruptions could require structural agricultural investments beyond monetary policy.
  2. Global Economic Uncertainties:
    • Challenge: The document notes a projected global growth slowdown to 2.8% in 2025 and trade uncertainties due to U.S. tariffs. These external shocks could affect Tanzania’s export markets and commodity prices (e.g., tea and sugar prices rose by 8.2% and 3.9%, respectively), indirectly influencing domestic inflation.
    • Impact: External price pressures could make it challenging to maintain the 5% target, especially if import costs rise or export revenues decline, affecting the balance of payments and exchange rate stability.
    • Mitigation: Diversifying export markets and strengthening foreign exchange reserves (e.g., through gold exports) could help, but global volatility remains a significant risk.
  3. Energy and Fuel Price Fluctuations:
    • Challenge: Although energy, fuel, and utilities inflation eased to 7.3% in April 2025 from 9.3% in April 2024 month-on-month fluctuations (e.g., 2.4% in April 2024, 1.9% in April 2025). These fluctuations could destabilize inflation if global oil prices reverse their 6.7% decline.
    • Impact: Energy price spikes could increase production and transportation costs, pushing inflation above the 5% target and hindering industrial development.
    • Mitigation: The Bank’s data-dependent monetary policy adjustments can respond to such shocks, but reliance on global commodity markets limits control.
  4. Balancing Growth and Inflation Control:
    • Challenge: The document emphasizes the Bank’s dual mandate of price stability and supporting economic growth. Tightening monetary policy to curb inflation (e.g., raising the CBR above 6%) could slow economic activity, while loosening it risks inflation exceeding 5%.
    • Impact: For example, core inflation’s decline to 2.2% suggests room for accommodative policy, but rising non-core inflation (5.7% in April 2025, could force tighter measures, potentially constraining investment and growth.
    • Mitigation: The Bank’s use of instruments like repurchase agreements and the Lombard facility allows flexibility, but aligning these tools with growth objectives requires precise calibration.
  5. Structural Constraints:
    • Challenge: Logistics challenges and supply-side issues, as noted in the document, contribute to price volatility. These structural factors are not directly addressed by monetary policy, limiting the Bank’s ability to maintain the 5% target.
    • Impact: Persistent supply chain inefficiencies could keep food and non-core inflation elevated, as seen in the 5.3% food inflation rate, challenging the target and affecting living standards.
    • Mitigation: Complementary fiscal policies, such as infrastructure investments, are needed to address these constraints, but coordination between monetary and fiscal authorities can be complex.

Conclusion

The Bank of Tanzania’s 5% medium-term inflation target aligns with sustainable economic development by fostering price stability, supporting economic growth, ensuring food affordability, and stabilizing the external sector. Figures from the document, such as the 3.2% headline inflation, 2.2% core inflation, and 557,228 tonnes of NFRA food stocks in April 2025, demonstrate the Bank’s success in maintaining a stable economic environment conducive to development. However, challenges like food price volatility (5.3% food inflation), global economic uncertainties (2.8% global growth forecast), energy price fluctuations (7.3% energy inflation), and structural constraints could push inflation above the target, risking economic stability. Addressing these challenges requires a combination of monetary policy precision, supply-side interventions, and regional cooperation to ensure sustainable development.

The table includes critical data points on inflation, monetary policy, food security, and external sector performance, as these are central to understanding the alignment and challenges discussed in the previous response.

Table: Key Economic Figures for Tanzania (May 2025 Economic Review)

CategoryIndicatorValue
InflationHeadline Inflation (April 2025)3.2%
Headline Inflation (March 2025)3.3%
Headline Inflation (April 2024)3.1%
Food Inflation (April 2025)5.3%
Food Inflation (April 2024)1.4%
Core Inflation (April 2025)2.2%
Core Inflation (April 2024)3.9%
Energy, Fuel, and Utilities Inflation (April 2025)7.3%
Energy, Fuel, and Utilities Inflation (April 2024)9.3%
Non-Core Inflation (April 2025)5.7%
Monetary PolicyCentral Bank Rate (CBR, April 2025)6.0%
Medium-Term Inflation Target5.0%
Short-Term Inflation Target (April 2025)3.5%
Food SecurityNFRA Food Stocks (April 2025)557,228 tonnes
NFRA Food Stocks (April 2024)340,102 tonnes
Maize Released by NFRA (April 2025)29,834 tonnes
Global Economic ContextGlobal Growth Forecast (2025)2.8%
Global Growth Projection (January 2025)3.3%
Gold Price (April 2025)USD 3,000 per troy ounce
Gold Price (March 2025)USD 2,983.25 per troy ounce
Crude Oil Price Change (April 2025)-6.7%
Tea Price Increase (April 2025)8.2%
Sugar Price Increase (April 2025)3.9%

Notes on the Table

  • Inflation Figures: These highlight the stability of headline inflation (3.2% in April 2025) within the 5% medium-term target, but food inflation (5.3%) and non-core inflation (5.7%) exceed the target, posing challenges.
  • Monetary Policy: The CBR at 6% and the 5% medium-term target reflect efforts to balance price stability and growth, with the short-term target of 3.5% indicating flexibility in policy adjustments.
  • Food Security: The significant increase in NFRA food stocks (from 340,102 to 557,228 tonnes) and maize releases (29,834 tonnes) underscore efforts to stabilize food prices, supporting economic development.
  • Global Context: Global growth slowdown (2.8%) and commodity price changes (e.g., crude oil -6.7%, gold USD 3,000) highlight external factors that could influence Tanzania’s inflation and external sector performance.
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Tanzania Tackles 5.3% Food Inflation (2025) with 557K Tonnes in Food Stocks for Inclusive Growth

In April 2025, Tanzania faced a surge in food inflation to 5.3%, up from 1.4% in April 2024, driven by weather-induced supply volatility and logistics challenges, as reported in the "Monthly Economic Review”. To ensure affordability and foster inclusive economic development, Tanzania can leverage policies like expanding the National Food Reserve Agency’s (NFRA) 557,228-tonne food stocks (up from 340,102 tonnes in 2024) and releasing 29,834 tonnes of maize to stabilize prices. With headline inflation at 3.2% and a steady 6% Central Bank Rate, the Bank of Tanzania’s 5% medium-term target supports economic stability amidst global uncertainties, including a 2.8% growth forecast. This introduction explores strategies to manage food prices for equitable growth.

Policies to Manage Food Price Increases and Ensure Affordability

  1. Strengthen Food Reserve and Distribution Systems:
    • Policy: Expand the National Food Reserve Agency’s (NFRA) capacity to stockpile and distribute staple foods, particularly maize, to stabilize supply and mitigate price spikes. The document notes that NFRA increased food stocks to 557,228 tonnes by April 2025, up from 340,102 tonnes in April 2024, and released 29,834 tonnes of maize to local traders. Further increasing stock levels and strategic releases during price surges can dampen food inflation.
    • Impact on Affordability: By ensuring a steady supply of staples like maize, which saw a significant price increase contributing to the 5.3% food inflation, the NFRA can prevent sharp price hikes, making food more affordable for low-income households. This supports inclusive development by reducing the cost-of-living burden, as food is a major component of household expenditure.
    • Implementation: Invest in storage infrastructure and improve distribution networks to reduce logistics costs, which the document identifies as a factor in price volatility. For example, expanding NFRA’s capacity to release more than 29,834 tonnes during peak demand periods could further stabilize prices.
  2. Invest in Agricultural Productivity and Resilience:
    • Policy: Enhance agricultural productivity through investments in irrigation, climate-resilient seeds, and modern farming techniques to address weather-induced supply volatility, a key driver of the 5.3% food inflation. Subsidizing inputs like fertilizers and providing extension services can boost yields of staple crops.
    • Impact on Affordability: Increased production of staple food crops, as noted in improved forecasts for coffee and wheat, can reduce supply shortages, lowering prices. For instance, if maize production increases, it could counteract the price pressures that drove food inflation above the 5% medium-term target. Affordable food prices ensure broader access, promoting inclusive growth by supporting rural and low-income populations.
    • Implementation: Allocate public funds to irrigation projects and partner with agricultural research institutions to develop drought-resistant crops. The document’s mention of global agricultural commodity price declines (e.g., coffee, wheat) suggests potential for replicating such improvements domestically.
  3. Improve Logistics and Supply Chain Infrastructure:
    • Policy: Upgrade transportation and logistics infrastructure to reduce costs associated with food distribution, as logistics challenges contributed to high staple food prices. Investments in rural road networks and market access can streamline supply chains.
    • Impact on Affordability: Efficient logistics can lower the cost of transporting food from rural to urban areas, reducing retail prices. For example, the 5.3% food inflation rate could be mitigated by cutting transportation costs, making staples more affordable and supporting urban poor households, thus fostering inclusive development.
    • Implementation: Prioritize infrastructure projects in the national budget, potentially funded through public debt, as defined in the glossary, which includes domestic and external borrowing for development projects. Public-private partnerships could also accelerate logistics improvements.
  4. Implement Targeted Subsidies and Social Safety Nets:
    • Policy: Introduce or expand targeted subsidies for staple foods and social safety nets, such as food vouchers or cash transfers, to shield low-income households from the 5.3% food inflation impact. These measures can complement NFRA’s efforts to stabilize supply.
    • Impact on Affordability: Subsidies reduce the effective cost of food for vulnerable populations, ensuring access despite price increases. For instance, core inflation’s decline to 2.2% in April 2025 indicates easing non-food price pressures, allowing fiscal space to redirect resources to food subsidies. This promotes inclusive development by protecting purchasing power for the poor, who spend a higher share of income on food.
    • Implementation: Use data from the National Bureau of Statistics to identify high-risk groups and design means-tested programs. The government’s budgetary operations could allocate funds for such initiatives, ensuring fiscal sustainability.
  5. Strengthen Regional Trade and Market Integration:
    • Policy: Leverage Tanzania’s alignment with EAC and SADC benchmarks to enhance regional trade in food commodities, importing staples from surplus areas to offset domestic shortages. This can stabilize prices affected by local supply volatility.
    • Impact on Affordability: Importing affordable food from regional partners can counteract the 5.3% food inflation, ensuring stable prices for consumers. For example, the global decline in wheat prices suggests potential for importing cheaper grains, enhancing affordability and supporting inclusive growth by reducing food costs across income levels.
    • Implementation: Negotiate trade agreements within EAC/SADC to reduce tariffs on food imports. The document’s note on easing global trade tensions suggests a favorable environment for such negotiations, supported by stable exchange rates managed by the Bank of Tanzania.

Challenges and Considerations

  • Fiscal Constraints: Funding subsidies or infrastructure investments may strain government budgetary operations. The glossary defines public debt as including domestic and external borrowing for development projects, but rising debt levels could limit fiscal space.
  • Global Volatility: The document’s mention of a 2.8% global growth forecast and U.S. tariffs could disrupt import costs, complicating regional trade strategies. For example, tea and sugar price increases (8.2% and 3.9%) highlight global price risks.
  • Supply-Side Limitations: Weather-induced volatility requires long-term investments in agriculture, which may take years to yield results. The NFRA’s 557,228-tonne stock is a short-term fix but may not suffice during prolonged disruptions.
  • Coordination: Effective policies require coordination between monetary policy (e.g., maintaining the 6% CBR) and fiscal measures, which can be complex given structural constraints noted in the document.

Conclusion

To manage the 5.3% food inflation in April 2025 and ensure affordability, Tanzania can strengthen NFRA’s food reserves (557,228 tonnes, 29,834 tonnes maize released), invest in agricultural resilience, improve logistics, provide targeted subsidies, and enhance regional trade within EAC/SADC. These policies support inclusive economic development by stabilizing food prices, protecting low-income households, and fostering rural and urban economic growth. Figures like the 3.2% headline inflation and 2.2% core inflation suggest room for complementary fiscal measures, but challenges like global uncertainties (2.8% growth forecast) and fiscal constraints require careful policy calibration.

Table: Key Economic Figures for Managing Food Inflation in Tanzania (May 2025)

CategoryIndicatorValue
InflationFood Inflation (April 2025)5.3%
Food Inflation (April 2024)1.4%
Headline Inflation (April 2025)3.2%
Headline Inflation (March 2025)3.3%
Core Inflation (April 2025)2.2%
Core Inflation (April 2024)3.9%
Non-Core Inflation (April 2025)5.7%
Energy, Fuel, and Utilities Inflation (April 2025)7.3%
Energy, Fuel, and Utilities Inflation (April 2024)9.3%
Food SecurityNFRA Food Stocks (April 2025)557,228 tonnes
NFRA Food Stocks (April 2024)340,102 tonnes
Maize Released by NFRA (April 2025)29,834 tonnes
Monetary PolicyCentral Bank Rate (CBR, April 2025)6.0%
Medium-Term Inflation Target5.0%
Global Economic ContextGlobal Growth Forecast (2025)2.8%
Crude Oil Price Change (April 2025)-6.7%
Tea Price Increase (April 2025)8.2%
Sugar Price Increase (April 2025)3.9%
Wheat Price Change (April 2025)Decline (specific % not provided)

Notes on the Table

  • Inflation Figures: The 5.3% food inflatio exceeds the 5% medium-term target, highlighting the urgency of policies to stabilize food prices. The 3.2% headline inflation and 2.2% core inflation indicate overall price stability, providing fiscal space for subsidies or investments. Non-core inflation at 5.7% underscores the role of volatile food prices in driving inflation.
  • Food Security: The NFRA’s food stocks increased significantly to 557,228 tonnes from 340,102 tonnes and the release of 29,834 tonnes of maize demonstrates proactive supply-side intervention to curb price spikes, supporting affordability.
  • Monetary Policy: The 6% CBR supports economic stability, complementing efforts to manage food inflation through supply-side measures, aligning with the 5% inflation target for inclusive growth.
  • Global Context: The 2.8% global growth forecast and commodity price changes (e.g., -6.7% for crude oil, 8.2% for tea) affect Tanzania’s import costs and export revenues, influencing food affordability and trade strategies.
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Tanzania’s External Debt Hits USD 35.51 Billion in April 2025

In April 2025, Tanzania’s external debt reached USD 35.51 billion, with the central government holding 76.7% (USD 27.22 billion) and the private sector 23.3% (USD 8.28 billion), including significant interest arrears of USD 1.63 billion. Funds were primarily allocated to transport and telecommunications (21.5%), balance of payments and budget support (20.2%), and social welfare and education (19.9%), reflecting priorities in infrastructure and human capital. The debt, predominantly denominated in USD (67.4%), exposes Tanzania to exchange rate risks, mitigated by USD 5.3 billion in reserves. The following table summarizes these key figures.

1. External Debt Stock by Borrowers (April 2025)

The external debt stock represents the total outstanding debt owed to foreign creditors, categorized by borrower type, providing insight into the distribution of debt obligations.

Key Figures:

  • Total External Debt Stock: USD 35,505.9 million
  • Breakdown by Borrower:
Borrower CategoryAmount (USD Million)Share (%)
Central Government27,224.076.7%
– Disbursed Outstanding Debt (DOD)27,146.176.5%
– Interest Arrears78.00.2%
Private Sector8,278.123.3%
– DOD6,641.118.7%
– Interest Arrears1,637.04.6%
Public Corporations3.80.0%

Analysis:

  • Central Government Dominance: The central government accounts for 76.7% of the external debt stock (USD 27,224.0 million), with nearly all being disbursed outstanding debt (DOD) at USD 27,146.1 million. The low interest arrears (USD 78.0 million, 0.2%) indicate effective debt servicing, consistent with the Monthey Economic Review’s note of fiscal discipline and a fiscal deficit target below 3% of GDP. TICGL confirm the central government as the largest borrower, holding 78% of external debt in December 2019, a trend that persists into 2025.
  • Private Sector Debt: The private sector’s share of 23.3% (USD 8,278.1 million) is significant, with USD 6,641.1 million in DOD and USD 1,637.0 million in interest arrears (4.6% of total debt). The high arrears suggest repayment challenges, possibly due to foreign exchange shortages, as the Tanzanian Shilling (TZS) depreciated by 3.9% annually to TZS 2,684.41/USD in April 2025 (previous responses). TICGL note private sector credit growth of 13.2% in February 2025, indicating active borrowing but potential liquidity constraints.
  • Public Corporations: The negligible share of public corporations (USD 3.8 million, 0.0%) reflects minimal external borrowing by state-owned enterprises, likely due to reliance on central government funding or domestic financing. This aligns with TICGL noting public corporations’ 0.4% share in 2019.
  • Debt Sustainability: The IMF’s Debt Sustainability Analysis (DSA) indicates a moderate risk of external debt distress, with the public debt-to-GDP ratio at 35% in 2024, well below the 55% benchmark. The total external debt of USD 35.51 billion in April 2025, up from USD 32.09 billion in January 2025, suggests rising borrowing but within sustainable limits, supported by gross official reserves of USD 5.3 billion (4.3 months of import cover, previous responses).

Insights:

  • The central government’s dominant share (76.7%) reflects its role in financing infrastructure and budget deficits, as seen in the Monthey Economic Review’s mention of Treasury bond auctions (TZS 519.6 billion successful bids, previous responses). Low arrears (0.2%) indicate proactive debt management.
  • The private sector’s high interest arrears (USD 1,637.0 million) highlight vulnerabilities to currency depreciation and foreign exchange constraints, consistent with the Monthey Economic Review’s note of lower seasonal foreign exchange inflows (previous responses).
  • The negligible public corporation debt suggests a centralized borrowing strategy, reducing fiscal risks from state-owned enterprises.

2. Disbursed Outstanding Debt by Use of Funds (April 2025)

This breakdown shows how external debt funds are allocated across economic sectors, reflecting government priorities and economic development goals.

Key Figures:

  • Total Disbursed Outstanding Debt (DOD): Included in the total external debt of USD 35,505.9 million.
  • Breakdown by Sector/Use:
Sector/UsePercentage Share (%)
Transport & Telecommunication21.5
BoP & Budget Support20.2
Social Welfare & Education19.9
Energy & Mining13.6
Agriculture5.1
Real Estate & Construction4.7
Industries3.9
Finance & Insurance3.9
Tourism1.6
Other5.4

Analysis:

  • Transport & Telecommunication (21.5%): The largest share reflects significant investments in infrastructure, such as the Standard Gauge Railway (SGR) and telecommunications upgrades, aligning with the Monthey Economic Review’s focus on flagship projects. TICGL note transport and telecom as the top sector for external debt allocation since 2019 (27%), indicating sustained priority.
  • BoP & Budget Support (20.2%): This substantial share supports fiscal and macroeconomic stability, addressing balance of payments (BoP) needs and budget deficits. The Monthey Economic Review reports a March 2025 deficit of TZS 284.3 billion (previous responses), likely financed partly through external loans, as confirmed by IMF disbursements (USD 440.8 million under the ECF).
  • Social Welfare & Education (19.9%): The high allocation to social sectors underscores Tanzania’s focus on human capital, aligning with the World Bank’s Country Partnership Framework (2025–2029) emphasizing education and health. This supports the Third Five-Year Development Plan’s goals for inclusive growth.
  • Energy & Mining (13.6%): Investments in energy (e.g., Julius Nyerere Hydropower Project) and mining (e.g., gold, contributing USD 3.66 billion in exports) reflect strategic priorities for energy security and resource development. TICGL confirm this sector’s importance, with 15% of debt allocated in 2019.
  • Smaller Sectors: Agriculture (5.1%), real estate (4.7%), industries (3.9%), finance & insurance (3.9%), and tourism (1.6%) receive smaller shares, indicating diversified but less prioritized investments. The Monthey Economic Review notes agricultural export growth, suggesting some debt supports this sector’s productivity.

Insights:

  • The focus on hard infrastructure (transport, telecom, energy) supports Tanzania’s Vision 2050 goals of structural transformation and 8% GDP growth by 2026, as infrastructure drives economic activity (5.6% GDP growth in 2024).
  • The significant BoP and budget support (20.2%) reflects reliance on external financing for fiscal stability, consistent with the IMF’s ECF and RSF programs.
  • The 19.9% allocation to social welfare and education aligns with efforts to close human capital gaps, as highlighted by the IMF’s call for increased social spending.

3. Disbursed Outstanding Debt by Currency Composition (April 2025)

The currency composition of external debt indicates exposure to exchange rate risks and borrowing TICGL.

Key Figures:

  • Breakdown by Currency:
CurrencyShare (%)
US Dollar (USD)67.4
Euro (EUR)16.8
Chinese Yuan (CNY)6.3
Other Currencies9.5

Analysis:

  • US Dollar Dominance (67.4%): The USD’s dominant share exposes Tanzania to exchange rate risks, as the TZS depreciated by 3.9% annually to TZS 2,684.41/USD in April 2025 (previous responses). TICGL confirm USD dominance at 68.1% in January 2025, consistent with historical trends (68.9% in 2023). This reflects borrowing from multilateral institutions (e.g., IMF, World Bank) and commercial creditors, who account for 53.9% and 36.3% of external debt, respectively.
  • Euro (16.8%): The significant Euro share indicates borrowing from European institutions or bilateral creditors (e.g., EU partners). The stable Euro share (16.1% in January 2025) suggests consistent European financing, likely for infrastructure and social projects.
  • Chinese Yuan (6.3%): The Yuan’s share reflects China’s role as a key bilateral creditor, likely tied to infrastructure projects like the SGR. TICGL note China as a top FDI source, with Yuan-denominated loans growing in importance.
  • Other Currencies (9.5%): This includes currencies like the Japanese Yen or multilateral basket currencies (e.g., IMF’s SDRs), reflecting diversified borrowing. The Monthey Economic Review’s mention of reserves (USD 5.3 billion, previous responses) supports Tanzania’s capacity to manage multi-currency debt obligations.

Insights:

  • The USD’s 67.4% share heightens vulnerability to TZS depreciation, as seen in the 1.3% monthly depreciation from March to April 2025 (previous responses). The BoT’s intervention (USD 6.25 million sold in April 2025) mitigates this risk (previous responses).
  • The Euro and Yuan shares indicate diversified creditor relationships, reducing reliance on a single currency but requiring careful debt management to avoid currency mismatches.
  • The Monthey Economic Review’s stable reserves (4.3 months of import cover) and IMF support provide a buffer against currency-related risks.

Conclusion

Tanzania’s external debt in April 2025, totaling USD 35.51 billion, is predominantly held by the central government (76.7%, USD 27.22 billion), with the private sector contributing 23.3% (USD 8.28 billion), including significant interest arrears (USD 1.63 billion). Funds are primarily allocated to transport and telecommunications (21.5%), BoP and budget support (20.2%), and social welfare and education (19.9%), reflecting priorities in infrastructure and human capital. The debt’s currency composition, dominated by the USD (67.4%), followed by the Euro (16.8%) and Yuan (6.3%), exposes Tanzania to exchange rate risks, mitigated by reserves of USD 5.3 billion and BoT interventions. The debt profile supports growth (projected at 6% in 2025) and fiscal stability, with a moderate risk of distress per the IMF’s DSA.

The following table summarizes these key figures.

CategoryMetricValue
External Debt Stock by BorrowersTotal External DebtUSD 35,505.9 million
Central GovernmentUSD 27,224.0 million (76.7%)
– Disbursed Outstanding Debt (DOD)USD 27,146.1 million (76.5%)
– Interest ArrearsUSD 78.0 million (0.2%)
Private SectorUSD 8,278.1 million (23.3%)
– DODUSD 6,641.1 million (18.7%)
– Interest ArrearsUSD 1,637.0 million (4.6%)
Public CorporationsUSD 3.8 million (0.0%)
Disbursed Outstanding Debt by Use of FundsTransport & Telecommunication21.5%
BoP & Budget Support20.2%
Social Welfare & Education19.9%
Energy & Mining13.6%
Agriculture5.1%
Real Estate & Construction4.7%
Industries3.9%
Finance & Insurance3.9%
Tourism1.6%
Other5.4%
Disbursed Outstanding Debt by Currency CompositionUS Dollar (USD)67.4%
Euro (EUR)16.8%
Chinese Yuan (CNY)6.3%
Other Currencies9.5%
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Reinvesting USD 3,842.6 Million in Tourism Revenues from 2,162,487 Arrivals in April 2025 into Human Capital for Tanzania’s Inclusive Growth

In April 2025, Tanzania’s tourism sector recorded an 11.5% increase in arrivals to 2,162,487, generating USD 3,842.6 million in services receipts, a 7.1% rise from ~USD 3,589.9 million in 2024, reinforcing its role as a key driver of the economy (56.0% of services exports). Reinvesting these revenues into human capital development—education and health, which account for 19.9% of external debt use—can foster inclusive growth and reduce reliance on volatile sectors like tourism. By allocating a portion of the USD 3,842.6 million to targeted programs, such as teacher training, healthcare infrastructure, and vocational skills, Tanzania can enhance workforce productivity and diversify its economy. Key issues include tourism revenue volatility, limited human capital investment, and economic diversification challenges. Strategies like earmarking tourism taxes, public-private partnerships (PPPs), and community-based training programs can ensure sustainable human capital development, supporting Tanzania’s Vision 2025 and 6% GDP growth projection for 2025.

Main Key Issues

  1. Tourism Revenue Volatility and Economic Contribution
    • Strong Tourism Performance: The 11.5% increase in tourist arrivals to 2,162,487 in April 2025, compared to 1,938,875 in April 2024, drove services receipts to USD 3,842.6 million, up 7.1% from ~USD 3,589.9 million (previous responses). Tourism accounts for 56.0% of total services receipts (USD 6,940.8 million) and ~10% of GDP, with projections to reach 19.5% by 2025/26. TICGL confirm a record 2,106,870 arrivals by November 2024, generating USD 3,680 million.
    • Volatility Risks: Tourism is vulnerable to external shocks, such as pandemics (e.g., 2020 arrivals dropped to 616,491), geopolitical tensions, or climate events affecting attractions like Serengeti or Kilimanjaro. The Monthey Economic Review notes seasonal foreign exchange inflows (previous responses), highlighting tourism’s cyclical nature. This volatility contributed to a current account deficit of USD 2,224.9 million in April 2025, despite an 18.6% improvement (previous responses).
    • Revenue Potential: Tourism generates direct revenue (e.g., park fees, visas) and indirect benefits (e.g., hospitality, transport). Assuming a 10% tax or fee on tourism receipts (a conservative estimate based on VAT and park fees), USD 3,842.6 million could yield ~USD 384.3 million for reinvestment, equivalent to TZS 1,031.3 billion at TZS 2,684.41/USD (previous responses).
  2. Limited Human Capital Investment
    • Current Allocation: Human capital development, particularly education and health, receives 19.9% of Tanzania’s USD 35,505.9 million external debt (previous responses), equivalent to ~USD 7,065.7 million, supporting initiatives like free secondary education and health infrastructure. However, development expenditure in March 2025 was TZS 1,406.7 billion (41.7% of total expenditure), with only a portion allocated to human capital, as recurrent spending (TZS 1,968.4 billion, 58.3%) dominates for wages and debt servicing (previous responses).
    • Human Capital Gaps: Tanzania’s Human Capital Index (HCI) is 0.40, below the Sub-Saharan Africa average of 0.48, indicating that a child born today will achieve only 40% of their potential productivity. Education challenges include low secondary completion rates (30% in 2023) and teacher shortages, while health faces issues like high maternal mortality (556 per 100,000 births). TICGL note underfunding, with health and education budgets at 7% and 15% of the 2024/25 budget.
    • Impact on Growth: Limited human capital investment constrains inclusive growth, as low skills reduce labor productivity in sectors like agriculture (26% of GDP) and manufacturing (9%). The Monthey Economic Review emphasizes human capital for Vision 2025 goals, requiring increased funding to meet 8% GDP growth by 2026.
  3. Economic Diversification Challenges
    • Over-Reliance on Tourism: Tourism’s 56.0% share of services receipts and ~10% of GDP highlights over-reliance, with other services (e.g., ICT, financial) contributing only 8.8% (USD 653.6 million, previous responses). Goods exports like gold (USD 3,369.7 million, 36.8% of goods exports) are also volatile due to global price fluctuations. The Monthey Economic Review notes agricultural export growth (5.1% of external debt use, previous responses), but its contribution remains limited.
    • Diversification Needs: Reducing reliance on tourism requires developing sectors like manufacturing, ICT, and agriculture, which need skilled labor. TICGL advocate for industrialization under the African Continental Free Trade Agreement (AfCFTA, ratified 2022), but only 6% of firms train workers formally. The current account deficit (USD 2,224.9 million) underscores the need for diversified exports to stabilize external balances (previous responses).
    • Role of Human Capital: Investing tourism revenues in education and health can build a skilled workforce for diversified sectors, reducing volatility risks. For example, vocational training in ICT could support digital economy growth (mobile money transactions up 26.73%), while health improvements enhance labor productivity across sectors.

Strategies to Reinvest Tourism Revenues into Human Capital

  1. Earmark Tourism Taxes for Education and Health
    • Action: Allocate 10% of tourism receipts (USD 384.3 million, TZS 1,031.3 billion) as a dedicated fund for human capital, split equally between education (TZS 515.65 billion) and health (TZS 515.65 billion). This could finance teacher training (e.g., 10,000 new teachers at TZS 10 million/year, costing TZS 100 billion) and health facilities (e.g., 50 new clinics at TZS 8 billion each, costing TZS 400 billion).
    • Impact: This would increase education and health budgets by ~3% each (based on 2024/25 budget of TZS 49.35 trillion), improving secondary completion rates and reducing maternal mortality, aligning with the World Bank’s Country Partnership Framework (2025–2029). It could cover ~36.7% of March 2025’s development expenditure (1,031.3 / 1,406.7 × 100, previous responses).
  2. Establish Public-Private Partnerships (PPPs) for Vocational Training
    • Action: Partner with tourism operators (e.g., Serena Hotels) to fund vocational training centers, using 5% of receipts (USD 192.1 million, TZS 515.6 billion) to train 100,000 youth annually in skills like hospitality, ICT, and agribusiness (costing TZS 5 million per trainee, TZS 500 billion total). PPPs could leverage private expertise and infrastructure.
    • Impact: This would increase formal training (currently 6% of firms), supporting diversification into manufacturing (3.9% of external debt use) and ICT (8.8% of services receipts). Trained workers could boost GDP by 1–2% annually, as seen in Rwanda’s vocational programs, reducing tourism reliance.
  3. Community-Based Tourism Training Programs
    • Action: Use 3% of receipts (USD 115.3 million, TZS 309.4 billion) to fund community-based programs training locals near tourist sites (e.g., Serengeti, Zanzibar) in guiding, crafts, and sustainable tourism. Training 50,000 locals at TZS 6 million each (TZS 300 billion) could create jobs and retain revenue locally.
    • Impact: This would enhance inclusive growth, as 70% of tourism jobs are low-skill and local, reducing poverty (26.4% in 2022). It aligns with the Monthey Economic Review’s focus on job creation and could generate TZS 50–100 billion in local revenue annually.
  4. Invest in Health Infrastructure for Tourism Regions
    • Action: Allocate 2% of receipts (USD 76.9 million, TZS 206.3 billion) to build health facilities in tourism hubs, ensuring quality care for visitors and locals. Constructing 20 hospitals at TZS 10 billion each (TZS 200 billion) would improve health outcomes and tourism resilience.
    • Impact: This would reduce health-related risks to tourism (e.g., disease outbreaks), supporting 19.5% GDP contribution by 2025/26. Improved health enhances labor productivity, critical for diversification into agriculture (26% of GDP).

Conclusion

Tanzania’s tourism sector, with a record 2,162,487 arrivals in April 2025 generating USD 3,842.6 million (56.0% of services receipts), offers significant potential to fund human capital development, critical for inclusive growth and reducing reliance on volatile sectors. Key issues include tourism’s vulnerability to shocks, underinvestment in education and health (19.9% of USD 35.51 billion external debt), and limited economic diversification. Reinvesting ~20% of receipts (USD 768.6 million, TZS 2,062.6 billion) through earmarked taxes, PPPs, community training, and health infrastructure could enhance skills, reduce poverty, and diversify into sectors like ICT and manufacturing. These strategies align with Vision 2025’s 8% growth goal and, supported by a stable current account deficit (USD 2,224.9 million) and reserves (USD 5.3 billion), can ensure sustainable development. The following table summarizes these key figures.

CategoryMetricValue
Tourism PerformanceTourist Arrivals (April 2025)2,162,487 (↑ 11.5% from 1,938,875 in April 2024)
Tourism ReceiptsUSD 3,842.6 million (56.0% of services receipts, ↑ 7.1% from ~USD 3,589.9 million)
Total Services ReceiptsUSD 6,940.8 million (↑ 7.7% from USD 6,466.0 million)
Potential Tourism Tax (10%)USD 384.3 million (TZS 1,031.3 billion at TZS 2,684.41/USD)
Human Capital InvestmentExternal Debt for Social Welfare & Education19.9% of USD 35,505.9 million (~USD 7,065.7 million)
Development Expenditure (March 2025)TZS 1,406.7 billion (41.7% of TZS 3,375.1 billion)
Economic ContextCurrent Account DeficitUSD 2,224.9 million (↑ 18.6% from USD 2,733.4 million)
Foreign ReservesUSD 5.3 billion (4.3 months of import cover)
GDP Contribution of Tourism~10% (projected 19.5% by 2025/26)
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Total Expenditure Hits TZS 3,375.1 Billion, Balanced Between Recurrent and Development Spending

In March 2025, Tanzania’s government budgetary operations showcased robust fiscal performance, with total revenue of TZS 3,090.8 billion, falling 3.1% short of the TZS 3,190 billion target due to non-tax revenue underperformance (TZS 350.5 billion vs. TZS 522.4 billion). Tax revenue excelled at TZS 2,603.3 billion, 2% above target, driven by strong income tax collections (11.6% above target). Total expenditure reached TZS 3,375.1 billion, with 58.3% (TZS 1,968.4 billion) allocated to recurrent costs and 41.7% (TZS 1,406.7 billion) to development projects, resulting in a modest deficit of TZS 284.3 billion. The following table summarizes these key figures.

1. Central Government Revenues – March 2025

Central government revenues are critical for financing public expenditure and achieving fiscal objectives. The data for March 2025 highlights strong tax revenue performance despite a shortfall in total collections.

Key Figures:

  • Total Revenue Collected: TZS 3,090.8 billion
    • Performance vs. Target: 3.1% below the target of ~TZS 3,190 billion (calculated as 3,090.8 / 0.969 ≈ 3,190).
  • Breakdown of Revenues:
Revenue ComponentAmount (TZS Billion)Performance vs. Target
Total Revenue3,090.896.9% of target
Central Government Revenue2,953.895.6% of total revenue
Tax Revenue2,603.32% above target
Non-tax Revenue350.5Below target of 522.4
  • Key Tax Revenue Component:
    • Income tax exceeded its target by 11.6%, indicating robust collection efforts.

Analysis:

  • Overall Revenue Performance: The total revenue of TZS 3,090.8 billion, while 3.1% below the target, reflects strong fiscal discipline, particularly in tax collection. The Monthly Economic Review notes sustained tax administration initiatives (e.g., February 2025 revenue of TZS 2,697.8 billion, 98.3% of target,), suggesting that March’s 96.9% performance continues a trend of near-target collections. The shortfall is primarily due to non-tax revenue underperforming at TZS 350.5 billion against a target of TZS 522.4 billion (67.1% of target, calculated as 350.5 / 522.4 × 100).
  • Tax Revenue Strength: The tax revenue of TZS 2,603.3 billion, 2% above target, aligns with TICGL indicating improved tax collection efficiency, with the tax-to-GDP ratio rising to 11.8% in 2022/23 (). The strong performance of income tax (11.6% above target) likely reflects enhanced compliance and economic activity, supported by a projected GDP growth of 5.4%–6.0% in 2025 (,).
  • Non-tax Revenue Shortfall: Non-tax revenue (e.g., licenses, fees, dividends) at TZS 350.5 billion fell short of the TZS 522.4 billion target, a 32.9% underperformance. This could be due to lower-than-expected dividends from public enterprises or reduced fees, possibly linked to seasonal factors or administrative inefficiencies. The Monthly Economic Review does not specify non-tax revenue details but notes the use of Electronic Fiscal Devices (EFDs) to improve revenue administration, which may have been less effective for non-tax TICGL.

Interpretation:

  • The strong tax revenue performance (2% above target) indicates effective tax administration, likely driven by initiatives like EFDs and a focus on progressive taxes (e.g., income tax, VAT) as recommended by the World Bank (). The 11.6% outperformance in income tax suggests robust private sector activity, consistent with a 13.2% growth in private sector credit in February 2025.
  • The non-tax revenue shortfall (TZS 350.5 billion vs. TZS 522.4 billion) highlights a need for improved collection mechanisms for fees and dividends, as non-tax revenue is a smaller but critical component (11.3% of total revenue, calculated as 350.5 / 3,090.8 × 100).
  • The overall revenue collection of TZS 3,090.8 billion supports the government’s fiscal target of raising domestic revenue to 15.8% of GDP in 2024/25 (), contributing to fiscal sustainability.

Source Context:

  • TICGL confirm Tanzania’s focus on expanding the tax base, with domestic revenue projected at TZS 34.61 trillion (15.7% of GDP) for 2024/25 (). The March 2025 tax revenue performance aligns with this trajectory, though non-tax revenue challenges persist, as seen in earlier reports (e.g., TZS 347.8 billion in February 2025 vs. a target of TZS 413.9 billion).

2. Central Government Expenditures – March 2025

Expenditures reflect the government’s priorities in operational costs and development projects, critical for economic growth and public service delivery.

Key Figures:

  • Total Expenditure: TZS 3,375.1 billion
  • Expenditure Breakdown:
Expenditure TypeAmount (TZS Billion)
Recurrent Expenditure1,968.4
– Wages and Salaries~833.3
– Interest Payments~300.0
– Other Recurrent Spending~835.1
Development Expenditure1,406.7
  • Proportions:
    • Recurrent expenditure: 58.3% of total (1,968.4 / 3,375.1 × 100).
    • Development expenditure: 41.7% of total (1,406.7 / 3,375.1 × 100).

Analysis:

  • Recurrent Expenditure: At TZS 1,968.4 billion, recurrent spending (wages, interest, and other operational costs) constitutes the majority of expenditure. Wages and salaries (~TZS 833.3 billion) reflect significant public sector employment costs, consistent with the 35.1% minimum wage increase announced for July 2025. Interest payments (~TZS 300.0 billion) align with debt servicing obligations, as Tanzania’s external debt stood at USD 32.89 billion in September 2024. Other recurrent spending (~TZS 835.1 billion) likely includes administrative costs and social services, such as health and education, which are priorities in the 2024/25 budget.
  • Development Expenditure: At TZS 1,406.7 billion, development spending (41.7% of total) emphasizes infrastructure and social projects, such as the Standard Gauge Railway (SGR), Julius Nyerere Hydropower Project, and health initiatives. This aligns with the Monthly Economic Review’s focus on flagship projects (e.g., food stock management) and the 2024/25 budget’s allocation of TZS 16.4 trillion for development.
  • Fiscal Discipline: The close alignment of expenditure (TZS 3,375.1 billion) with revenue (TZS 3,090.8 billion) indicates disciplined fiscal management, as the deficit is relatively modest (see below). The Monthly Economic Review notes a fiscal deficit target below 3% of GDP, supported by TICGL projecting a 2.5% deficit in 2024/25.

Interpretation:

  • The 58.3% share of recurrent expenditure reflects ongoing operational needs, particularly wages and debt servicing, which are critical for maintaining public sector stability. The Monthly Economic Review’s stable CBR at 6% supports manageable interest payments.
  • The 41.7% share for development expenditure highlights Tanzania’s commitment to infrastructure and human capital, aligning with the Third Five-Year Development Plan (2021/22–2025/26) goals of 8% GDP growth by 2026 and job creation.
  • The balance between recurrent and development spending supports inclusive growth, as noted in the World Bank’s focus on enhancing human capital and private sector-led growth.

3. Revenue vs. Expenditure Snapshot and Budget Deficit

The comparison between revenue and expenditure provides insight into fiscal balance and financing needs.

Key Figures:

  • Revenue: TZS 3,090.8 billion
  • Expenditure: TZS 3,375.1 billion
  • Budget Deficit: ~TZS 284.3 billion (3,375.1 - 3,090.8)
  • Comparison: March 2024 vs. March 2025:
Component2024 (Mar)2025 (Mar)
Revenue (Total)~TZS 3,279.6BTZS 3,090.8B
Tax Revenue~TZS 2,553.2BTZS 2,603.3B
Non-tax Revenue~TZS 374.3BTZS 350.5B
Expenditure (Total)~TZS 3,349.0BTZS 3,375.1B
Development Expenditure~TZS 1,274.8BTZS 1,406.7B

Analysis:

  • Budget Deficit: The deficit of TZS 284.3 billion (approximately 8.4% of expenditure, calculated as 284.3 / 3,375.1 × 100) indicates a financing gap, likely covered by domestic borrowing (e.g., Treasury bills and bonds, as seen in the Government Securities Market with TZS 519.6 billion in successful bond bids, previous responses) or external borrowing (e.g., IMF’s USD 440.8 million under the ECF,). The Monthey Economic Review notes the use of domestic and external borrowing to finance deficits.
  • Year-on-Year Trends:
    • Revenue Decline: Total revenue fell from ~TZS 3,279.6 billion in March 2024 to TZS 3,090.8 billion in March 2025 (down 5.8%), driven by a 6.4% drop in non-tax revenue (374.3 to 350.5 billion). Tax revenue, however, increased by 2% (2,553.2 to 2,603.3 billion), reflecting improved tax administration.
    • Expenditure Increase: Total expenditure rose slightly from ~TZS 3,349.0 billion to TZS 3,375.1 billion (up 0.8%), with development expenditure growing significantly by 10.4% (1,274.8 to 1,406.7 billion), underscoring infrastructure priorities.
  • Fiscal Context: The Monthly Economic Review highlights a fiscal deficit target below 3% of GDP, and TICGL note a projected 2.5% deficit in 2024/25 (). The March 2025 deficit of TZS 284.3 billion is modest relative to the 2024/25 budget of TZS 49.35 trillion (), suggesting fiscal prudence.

Interpretation:

  • The increase in tax revenue (2% above target) and development expenditure (10.4% year-on-year growth) reflects alignment with the 2024/25 budget priorities of infrastructure and human capital development.
  • The non-tax revenue shortfall and slight revenue decline indicate challenges in diversifying revenue TICGL, as noted in the World Bank’s call for broadening the tax base.
  • The modest deficit suggests effective fiscal management, supported by strong domestic revenue mobilization (15.7% of GDP in 2024/25,) and external financing options.

Conclusion

In March 2025, Tanzania’s government budgetary operations demonstrated robust fiscal performance, with tax revenue (TZS 2,603.3 billion) exceeding targets by 2%, driven by a strong income tax performance (11.6% above target). Total revenue of TZS 3,090.8 billion fell 3.1% short of the TZS 3,190 billion target due to non-tax revenue underperformance (TZS 350.5 billion vs. TZS 522.4 billion). Expenditure of TZS 3,375.1 billion was balanced between recurrent (58.3%, TZS 1,968.4 billion) and development spending (41.7%, TZS 1,406.7 billion), reflecting priorities in wages, debt servicing, and infrastructure. The resulting TZS 284.3 billion deficit indicates fiscal discipline, likely financed through domestic securities or external loans, aligning with the Monthly Economic Review’s stable macroeconomic framework (inflation at 3.2%, CBR at 6%).

The following table summarizes these key figures.

CategoryMetricValue (TZS Billion)
Central Government RevenuesTotal Revenue Collected3,090.8
Central Government Revenue2,953.8
Tax Revenue2,603.3 (2% above target)
Non-tax Revenue350.5 (below target of 522.4)
Income Tax Performance11.6% above target
Central Government ExpendituresTotal Expenditure3,375.1
Recurrent Expenditure1,968.4 (58.3%)
– Wages and Salaries~833.3
– Interest Payments~300.0
– Other Recurrent Spending~835.1
Development Expenditure1,406.7 (41.7%)
Revenue vs. ExpenditureBudget Deficit~284.3
Comparison: March 2024 vs. 2025Revenue (Total, 2024)~3,279.6
Revenue (Total, 2025)3,090.8
Tax Revenue (2024)~2,553.2
Tax Revenue (2025)2,603.3
Non-tax Revenue (2024)~374.3
Non-tax Revenue (2025)350.5
Expenditure (Total, 2024)~3,349.0
Expenditure (Total, 2025)3,375.1
Development Expenditure (2024)~1,274.8
Development Expenditure (2025)1,406.7
Read More
Lending Rates Ease to 15.16% Amid Stable Monetary Policy

In April 2025, Tanzania’s banking sector exhibited stable yet dynamic interest rate trends, reflecting a competitive financial environment. The overall lending rate eased to 15.16% from 15.50% in March 2025, enhancing credit access, while the short-term lending rate rose slightly to 16.15%, indicating cautious short-term lending. Deposit rates showed mixed trends, with the 12-month deposit rate increasing to 9.27% from 8.14%, incentivizing long-term savings, and negotiated deposit rates rising to 10.52%. The interest rate spread narrowed to 6.88% from 7.72% a year earlier, signaling improved banking efficiency. The following table summarizes these key figures.

1. Lending Interest Rates (April 2025)

Lending interest rates reflect the cost of borrowing from commercial banks, influencing credit access for businesses and individuals. The provided data shows a stable yet slightly easing lending environment.

Key Figures:

Lending Rate TypeRate (%) – Apr 2025Previous Month (Mar 2025)1 Year Ago (Apr 2024)
Overall Lending Rate15.1615.5015.51
Short-term Lending Rate16.1515.8316.17
Negotiated Lending Rate12.8812.9413.46

Analysis:

  • Overall Lending Rate: The decline from 15.50% in March 2025 to 15.16% in April 2025 (a 0.34 percentage point drop) indicates a marginal easing of borrowing costs. This aligns with the stable Central Bank Rate (CBR) of 6% maintained by the Bank of Tanzania (BoT) in April 2025 (Monthey Economic Review), suggesting a cautious monetary policy to support economic growth while managing inflation (3.2% in April 2025). Compared to April 2024 (15.51%), the rate is down by 0.35 percentage points, reflecting a gradual trend toward lower borrowing costs.
  • Short-term Lending Rate: The increase from 15.83% in March 2025 to 16.15% in April 2025 (up 0.32 percentage points) suggests banks are charging slightly more for loans with maturities up to one year. This could reflect higher perceived risk or demand for short-term credit, possibly linked to seasonal economic activities (e.g., agricultural trade, as food stocks rose to 557,228 tonnes). Compared to April 2024 (16.17%), the rate is nearly stable, with a minor decrease of 0.02 percentage points.
  • Negotiated Lending Rate: The slight decline from 12.94% in March 2025 to 12.88% in April 2025 (down 0.06 percentage points) and a more significant drop from 13.46% in April 2024 (down 0.58 percentage points) indicates that prime or large borrowers (e.g., corporations or institutional clients) benefit from more favorable terms. This aligns with TICGL noting negotiated rates for prime borrowers averaging around 12.77%–12.79% in late suggesting continued flexibility for high-value clients.

Insights:

  • The slight decline in the overall lending rate to 15.16% suggests improved access to credit, supporting economic activities like investment and consumption. The Monthey Economic Review notes a projected GDP growth of 6% in 2025, which may be bolstered by these lower borrowing costs.
  • The rise in short-term lending rates to 16.15% could indicate banks’ caution in extending short-term credit, possibly due to seasonal liquidity demands or minor risk concerns, despite stable macroeconomic conditions (inflation at 3.2%).
  • The lower negotiated rates (12.88%) reflect banks’ willingness to offer competitive terms to prime borrowers, likely to support key sectors like manufacturing or trade, as noted in the diversified loan portfolio.

Source Context:

  • TICGL indicate that lending rates have been relatively stable, with November 2024 rates at 15.67% overall and 12.77% negotiated, consistent with the April 2025 trend of gradual declines. Historical data shows lending rates at 16.68% in 2020, suggesting a long-term downward trend from higher historical averages (19.78% from 1992–2020).

2. Deposit Interest Rates (April 2025)

Deposit interest rates reflect the returns offered by banks to attract savings, influencing liquidity and consumer behavior.

Key Figures:

Deposit Rate TypeRate (%) – Apr 2025Previous Month (Mar 2025)1 Year Ago (Apr 2024)
Savings Deposit Rate2.892.862.70
Overall Time Deposit Rate7.828.007.55
12-month Deposit Rate9.278.148.94
Negotiated Deposit Rate10.5210.359.59

Analysis:

  • Savings Deposit Rate: The slight increase from 2.86% in March 2025 to 2.89% in April 2025 (up 0.03 percentage points) and from 2.70% in April 2024 (up 0.19 percentage points) suggests banks are marginally increasing incentives for savings accounts. This aligns with TICGL noting a rise in savings deposit rates to 3.02% in August 2024, indicating a trend of encouraging household savings.
  • Overall Time Deposit Rate: The decline from 8.00% in March 2025 to 7.82% in April 2025 (down 0.18 percentage points) but an increase from 7.55% in April 2024 (up 0.27 percentage points) reflects a mixed trend. The monthly decline suggests eased liquidity pressure, as banks may have sufficient deposits, consistent with the Monthey Economic Review’s indication of high liquidity in the banking sector (evidenced by Government Securities Market oversubscription, previous responses).
  • 12-month Deposit Rate: The significant rise from 8.14% in March 2025 to 9.27% in April 2025 (up 1.13 percentage points) and from 8.94% in April 2024 (up 0.33 percentage points) indicates banks are offering higher returns for longer-term deposits to lock in funds. This contrasts with TICGL noting a decline to 8.18% overall deposit rates in November 2024, suggesting a strategic shift toward long-term deposits by April 2025.
  • Negotiated Deposit Rate: The increase from 10.35% in March 2025 to 10.52% in April 2025 (up 0.17 percentage points) and from 9.59% in April 2024 (up 0.93 percentage points) shows banks are competing for large or institutional deposits. This aligns with TICGL reporting negotiated deposit rates at 10.14% in November 2024, indicating a continued upward trend.

Insights:

  • The rise in savings (2.89%) and 12-month deposit rates (9.27%) suggests banks are incentivizing long-term savings, possibly to support lending activities or manage liquidity, as deposits are a primary funding source.
  • The decline in overall time deposit rates to 7.82% reflects ample liquidity, reducing the need to aggressively attract deposits, consistent with the Monthey Economic Review’s note of high banking sector liquidity (e.g., TZS 2,611.1 billion in Interbank Cash Market transactions, previous responses).
  • Higher negotiated deposit rates (10.52%) indicate competition for large depositors, likely institutional clients or pension funds, which hold significant domestic debt (26.5% by pension funds).

Source Context:

  • TICGL confirm a trend of rising deposit rates, with January 2025 rates at 10.08%, up from a historical average of 9.12% (2016–2025). The April 2025 negotiated rate of 10.52% continues this upward trend, reflecting banks’ efforts to attract deposits amid strong credit demand.

3. Interest Rate Spread

The interest rate spread, defined as the difference between lending and deposit rates, indicates banking sector efficiency and credit risk perceptions.

Key Figures:

  • Short-term Interest Rate Spread:
    • April 2025: 6.88 percentage points
    • April 2024: 7.72 percentage points
    • Change: Decrease of 0.84 percentage points

Analysis:

  • Declining Spread: The reduction from 7.72% in April 2024 to 6.88% in April 2025 indicates a more competitive and efficient banking system. This aligns with TICGL noting a narrowing spread to 5.93% in November 2024, suggesting continued improvement. The spread is calculated as the difference between the short-term lending rate (16.15%) and a corresponding deposit rate (e.g., 12-month deposit rate of 9.27%), yielding 6.88 percentage points.
  • Implications: A narrower spread suggests lower credit risk perceptions and increased competition, as banks charge less of a premium on loans while offering better returns to depositors. This is supported by the Monthey Economic Review’s stable macroeconomic environment (inflation at 3.2%, CBR at 6%) and TICGL noting reduced credit risk.
  • Context: The document’s indication of high liquidity in the Government Securities Market (e.g., TZS 1,076.7 billion in bond bids, previous responses) and Interbank Cash Market (TZS 2,611.1 billion) supports efficient liquidity management, contributing to the narrower spread.

Source Context:

  • TICGL confirm a trend of narrowing spreads, with August 2024 at 6.68% and November 2024 at 5.93%, reflecting improved banking efficiency. The April 2025 spread of 6.88% is slightly higher but consistent with this trend.

Conclusion

In April 2025, Tanzania’s lending and deposit interest rates reflected a stable and competitive financial sector. The overall lending rate eased to 15.16%, benefiting borrowers, while short-term rates rose slightly to 16.15%, indicating caution in short-term lending. Negotiated lending rates (12.88%) favored prime borrowers. Deposit rates showed mixed trends, with savings (2.89%) and 12-month rates (9.27%) rising, incentivizing long-term savings, while overall time deposit rates fell to 7.82%, reflecting ample liquidity. The interest rate spread narrowed to 6.88% from 7.72%, signaling improved efficiency and reduced credit risk. These trends align with the Monthey Economic Review’s stable monetary policy (CBR at 6%) and moderate inflation (3.2%), supporting economic growth projected at 6% in 2025. The following table summarizes these key figures.

The table is designed to present the data clearly and concisely, including comparisons with March 2025 and April 2024, as well as the interest rate spread, wrapped in an artifact tag as per the guidelines.

IndicatorApr 2024Mar 2025Apr 2025
Overall Lending Rate (%)15.5115.5015.16
Short-term Lending Rate (%)16.1715.8316.15
Negotiated Lending Rate (%)13.4612.9412.88
Savings Deposit Rate (%)2.702.862.89
Overall Time Deposit Rate (%)7.558.007.82
12-month Deposit Rate (%)8.948.149.27
Negotiated Deposit Rate (%)9.5910.3510.52
Interest Rate Spread (%)7.727.696.88
Read More
Treasury Bills Oversubscribed by 26.15% Amid Yield Drop to 8.86%

In April 2025, Tanzania's financial markets demonstrated robust activity, reflecting strong investor confidence and effective liquidity management. The Government Securities Market saw significant oversubscription, with Treasury bill bids reaching TZS 275 billion against a tender size of TZS 218 billion and Treasury bond bids totaling TZS 1,076.7 billion against TZS 481.7 billion, driven by declining yields (e.g., Treasury bills at 8.86%, down from 10.10%). The Interbank Cash Market recorded a 48.5% surge in transaction volume to TZS 2,611.1 billion, with a stable interest rate of 8.00%, supporting efficient liquidity redistribution among banks. The following table summarizes these key figures.

1. Government Securities Market

The Government Securities Market in Tanzania, encompassing Treasury bills and bonds, is a critical component of public debt financing and monetary policy implementation. The data you provided for April 2025 highlights strong investor confidence, high liquidity, and favorable macroeconomic conditions.

Key Figures and Details:

  • Treasury Bills:
    • Number of Auctions: 2 auctions were conducted in April 2025.
    • Total Tender Size: TZS 218 billion, representing the amount offered by the government.
    • Total Bids Received: TZS 275 billion, indicating oversubscription (bids exceeded the tender size by approximately 26.15%, calculated as [(275 - 218) / 218] × 100).
    • Successful Bids: TZS 208.2 billion, meaning 95.5% of the tender size was successfully allocated (208.2 / 218 × 100).
    • Weighted Average Yield (WAY): Decreased to 8.86% in April 2025 from 10.10% in March 2025, a reduction of 1.24 percentage points.
  • Treasury Bonds:
    • Types Offered: 2-year, 10-year, and 20-year bonds.
    • Total Tender Size: TZS 481.7 billion.
    • Total Bids Received: TZS 1,076.7 billion, reflecting significant oversubscription (bids were 2.24 times the tender size, calculated as 1,076.7 / 481.7).
    • Successful Bids: TZS 519.6 billion, indicating that 107.8% of the tender size was allocated (519.6 / 481.7 × 100), suggesting the government accepted slightly more than the offered amount, likely due to favorable bid terms.
    • Bond Yields:
      • 2-year bond: Yield decreased to 12.08% (specific prior yield not provided, but a decline is noted).
      • 10-year bond: Yield slightly increased to 14.26%.
      • 20-year bond: Yield decreased to 15.11%.
  • Implications of Oversubscription:
    • High Liquidity in the Banking Sector: The significant oversubscription (TZS 275 billion vs. TZS 218 billion for Treasury bills and TZS 1,076.7 billion vs. TZS 481.7 billion for bonds) indicates that banks and other investors had ample liquidity to invest in government securities.
    • Stable Macroeconomic Conditions: The document notes moderate headline inflation at 3.2% in April 2025 and a stable Central Bank Rate (CBR) at 6%, which likely contributed to a predictable investment environment, encouraging participation in auctions.
    • Rising Investor Confidence: The high bid-to-tender ratios and declining yields for Treasury bills and most bonds suggest strong demand for government securities, reflecting confidence in Tanzania’s fiscal and monetary stability.

Analysis and Contextual Insights:

  • Yield Trends:
    • The decline in the weighted average yield for Treasury bills (from 10.10% to 8.86%) aligns with the document’s indication of easing inflationary pressures (e.g., core inflation dropped to 2.2% from 3.9% year-on-year). Lower yields suggest reduced risk perceptions and strong demand, as investors are willing to accept lower returns for secure government securities.
    • The mixed yield movements for bonds (decreases for 2-year and 20-year, slight increase for 10-year) reflect varying investor expectations across maturities. The slight increase in the 10-year bond yield to 14.26% may indicate some market anticipation of longer-term risks, possibly related to global economic uncertainties mentioned in the document (e.g., a projected global growth slowdown to 2.8% in 2025).
  • Monetary Policy Link: The document explains that the Bank of Tanzania uses the discount rate, based on Treasury bill rates plus a loaded factor, to manage liquidity. The decline in Treasury bill yields to 8.86% suggests that the discount rate may also have remained stable or decreased, supporting the CBR’s maintenance at 6% to ensure inflation stays within the 5% medium-term target.
  • Lombard Facility: The banks can pledge government securities for overnight loans via the Lombard facility. The high subscription rates for both Treasury bills and bonds indicate that banks likely hold significant portfolios of these securities, enhancing their ability to access central bank liquidity when needed.
  • Public Debt Financing: The document defines public debt as including domestic debt to finance fiscal deficits. The successful bids (TZS 208.2 billion for bills and TZS 519.6 billion for bonds) demonstrate the government’s ability to raise substantial funds domestically, reducing reliance on external debt (noted as a component of national debt).

2. Interbank Cash Market (IBCM)

The Interbank Cash Market facilitates short-term lending and borrowing among banks, enabling efficient liquidity management. The data provided for April 2025 shows increased activity and stable interest rates.

Key Figures and Details:

  • Total Transactions:
    • April 2025: TZS 2,611.1 billion, a significant increase from TZS 1,757.7 billion in March 2025, representing a 48.5% rise (calculated as [(2,611.1 - 1,757.7) / 1,757.7] × 100).
  • Share of Transactions:
    • 7-day Deals: 40.7% of total transactions, indicating a preference for slightly longer-term liquidity management.
    • Overnight Deals: 15.2%, reflecting the use of the shortest-term loans for immediate liquidity needs.
  • Overall IBCM Interest Rate:
    • Decreased slightly to 8.00% in April 2025 from 8.12% in March 2025, a reduction of 0.12 percentage points.
  • Implications:
    • Active Liquidity Redistribution: The 48.5% increase in transaction volume suggests banks were actively managing liquidity, likely due to increased economic activity or seasonal demands (e.g., supporting agricultural trade, as food stocks increased to 557,228 tonnes).
    • Stable Interest Rates: The slight decline in the IBCM interest rate to 8.00% aligns with the stable CBR at 6%, indicating that interbank rates remained within the Bank of Tanzania’s target band, ensuring monetary policy effectiveness.

Analysis and Contextual Insights:

  • Monetary Policy Framework: The document outlines that the Bank of Tanzania uses the CBR to influence money supply and interbank rates. The stable CBR at 6% and the slight decline in IBCM rates to 8.00% suggest effective monetary policy transmission, maintaining rates within a target band conducive to economic growth and price stability (inflation target of 5%).
  • Repos and Reverse Repos: The defines repurchase agreements (repos) and reverse repos as tools used by the Bank of Tanzania to manage liquidity in the interbank market. The high transaction volume (TZS 2,611.1 billion) likely includes repo transactions, which facilitate short-term liquidity adjustments using government securities as collateral.
  • Liquidity Dynamics: The document’s mention of the Lombard facility, where banks can borrow overnight from the central bank, complements the IBCM by providing an alternative liquidity source. The increased IBCM transaction volume suggests banks preferred interbank lending over central bank facilities, possibly due to favorable rates or sufficient market liquidity.
  • Economic Context: The increase in food stocks and the release of 29,834 tonnes of maize by the National Food Reserve Agency indicate government spending to stabilize food prices, which may have increased liquidity needs in the banking sector. The IBCM’s robust activity (TZS 2,611.1 billion) reflects banks’ ability to redistribute this liquidity efficiently.

Conclusion

In April 2025, Tanzania’s financial markets demonstrated robustness:

  • Government Securities Market: The market saw strong demand, with Treasury bills oversubscribed (TZS 275 billion bids vs. TZS 218 billion tender) and bonds significantly oversubscribed (TZS 1,076.7 billion bids vs. TZS 481.7 billion tender). Declining yields for Treasury bills (8.86%) and most bonds (2-year: 12.08%, 20-year: 15.11%) reflect high liquidity and investor confidence, supported by stable macroeconomic conditions (3.2% inflation, 6% CBR).
  • Interbank Cash Market: Transaction volumes surged to TZS 2,611.1 billion from TZS 1,757.7 billion, with 7-day deals (40.7%) and overnight deals (15.2%) driving activity. The slight decline in interest rates to 8.00% indicates effective liquidity management within the Bank of Tanzania’s target band.

The table is designed to present the data clearly and concisely, focusing on the metrics you highlighted for both markets. Since the request is to develop a table with key figures.

MarketMetricValue
Government Securities Market - Treasury BillsNumber of Auctions2
Total Tender SizeTZS 218 billion
Total Bids ReceivedTZS 275 billion
Successful BidsTZS 208.2 billion
Weighted Average Yield (WAY)8.86% (down from 10.10% in March 2025)
Government Securities Market - Treasury BondsTypes Offered2-year, 10-year, 20-year bonds
Total Tender SizeTZS 481.7 billion
Total Bids ReceivedTZS 1,076.7 billion
Successful BidsTZS 519.6 billion
2-year Bond Yield12.08% (decreased)
10-year Bond Yield14.26% (slightly increased)
20-year Bond Yield15.11% (decreased)
Interbank Cash MarketTotal TransactionsTZS 2,611.1 billion (up from TZS 1,757.7 billion in March 2025)
Share of 7-day Deals40.7%
Share of Overnight Deals15.2%
Overall Interest Rate8.00% (down from 8.12% in March 2025)
Read More
Bridging Tanzania's Income-Cost Gap for Inclusive Economic Growth by 2030

Tanzania’s affordable cost of living, with 2025 monthly expenses of 1,240,012.4 TSh for a single person and 4,293,375 TSh for a family of four (excluding rent), alongside low rents like 1,039,418.93 TSh for a city-center 1-bedroom apartment, offers a strong foundation for economic development by 2030. These cost advantages can attract investment, boost tourism, and spur entrepreneurship. However, the significant affordability gap, where the average monthly net salary of 693,333.33 TSh falls short of these costs, threatens living standards and widens income disparities. By implementing targeted policies, such as wage increases, childcare subsidies, and infrastructure investments, Tanzania can bridge this gap to achieve inclusive and sustainable economic growth by 2030.

1. Capitalizing on Affordable Cost of Living for Economic Development by 2030

Tanzania’s low cost of living in 2025 provides a competitive advantage that can drive economic development by 2030 through strategic initiatives in investment, tourism, and entrepreneurship:

  • Attracting Foreign Investment and Remote Workers:
    Affordable living costs, such as 1,039,418.93 TSh for a city-center 1-bedroom apartment (range: 300,000–2,685,704 TSh) and 454,074.67 TSh outside city centers, position Tanzania as an attractive destination for foreign businesses and digital nomads by 2030. For instance, a tech startup could house employees at low costs, with utilities for an 85m² apartment averaging 168,125 TSh (range: 63,750–300,000 TSh). Scaling up foreign direct investment (FDI) in sectors like technology and manufacturing can create high-paying jobs, boosting economic growth.
    Example: By 2030, a remote worker earning a global salary could live on 1,694,087.07 TSh (single-person costs 1,240,012.4 TSh + rent 454,074.67 TSh), with surplus income fueling local economies through spending on services like dining (6,500 TSh per meal).
  • Boosting Tourism and Hospitality:
    Low dining and leisure costs, such as 6,500 TSh for an inexpensive meal (range: 3,000–15,000 TSh) and 12,000 TSh for a cinema ticket (range: 10,000–25,000 TSh), make Tanzania a compelling tourist destination. Affordable transportation, with a one-way ticket at 725 TSh (range: 600–2,000 TSh), enhances access to sites like Zanzibar and Serengeti. By 2030, investments in tourism infrastructure (e.g., hotels, transport networks) can significantly increase foreign exchange earnings, contributing to GDP growth.
    Example: A tourist spending 50,000 TSh on a mid-range meal for two and 45,000 TSh on a monthly transport pass generates consistent revenue for local businesses, supporting job creation.
  • Fostering Entrepreneurship:
    Low operational costs, including groceries (e.g., 2,700 TSh/kg for rice, 2,408.33 TSh/kg for bananas) and utilities (27,928.57 TSh for a mobile plan with 10GB+ data), enable entrepreneurs to launch ventures with minimal capital. By 2030, supporting micro-enterprises like food stalls or retail through low-cost inputs can drive economic diversification. For instance, a food stall sourcing 10kg of rice for 27,000 TSh and 5kg of chicken for 67,000 TSh keeps startup costs low.
    Example: A small business with monthly costs of 200,000 TSh (groceries, utilities, transport) can scale profitably in urban markets, contributing to local economic resilience.

2. Addressing the Affordability Gap by 2030

The average monthly net salary of 693,333.33 TSh in 2025 falls significantly below the estimated costs of 1,240,012.4 TSh for a single person (shortfall: 546,679.07 TSh) and 4,293,375 TSh for a family of four (shortfall: 3,600,041.67 TSh with one earner, 2,906,708.34 TSh with two earners). Including rent exacerbates this gap:

  • Single Person: Total costs with rent outside city centers (1,240,012.4 TSh + 454,074.67 TSh = 1,694,087.07 TSh) result in a shortfall of 1,000,753.74 TSh.
  • Family of Four: Total costs with a 3-bedroom apartment outside city centers (4,293,375 TSh + 934,804.40 TSh = 5,228,179.40 TSh) result in a shortfall of 4,534,846.07 TSh (one earner) or 3,841,512.74 TSh (two earners).

This gap limits purchasing power, lowers living standards, and widens income inequality, as only high earners can afford premium services like international schools (23,750,000 TSh/year). By 2030, addressing this gap is critical to ensuring inclusive growth.

3. Policy Recommendations to Reduce Income Disparities and Enhance Living Standards by 2030

To bridge the affordability gap and achieve sustainable economic growth by 2030, Tanzania can implement the following policies:

  • Increase Minimum Wages and Job Creation:
    Gradually raising the minimum wage to approach 1,240,012.4 TSh for singles or promoting dual-income households (e.g., two earners at 693,333.33 TSh = 1,386,666.66 TSh) can reduce the shortfall. By 2030, investments in high-growth sectors like manufacturing and tourism can create jobs paying above the current average, such as 1,000,000 TSh for factory workers, enabling singles to cover living costs.
    Impact: Reducing the 546,679.07 TSh shortfall for singles increases disposable income, boosting spending on non-essentials like 42,500 TSh for jeans or 158,571.43 TSh for a fitness club, stimulating retail growth.
  • Subsidize Childcare and Education:
    High childcare costs, such as 756,250 TSh/month for preschool (range: 375,000–1,300,000 TSh), burden families. By 2030, government subsidies or public preschool programs could lower costs to 200,000 TSh/month, freeing up 556,250 TSh for families. This would enhance labor force participation, particularly for women, and build human capital for a skilled workforce.
    Impact: Reducing childcare costs lowers the family shortfall from 3,600,041.67 TSh to 2,843,791.67 TSh, improving affordability and supporting economic productivity.
  • Improve Infrastructure for Cost Efficiency:
    Expanding affordable transportation (e.g., maintaining 725 TSh one-way tickets) and utilities (168,125 TSh for an 85m² apartment) can lower living costs by 2030. For example, reliable electricity could reduce utility bills to 100,000 TSh, saving 68,125 TSh/month. Affordable internet (98,222.22 TSh for 60 Mbps) can support remote work, increasing income opportunities.
    Impact: Lowering utility costs by 68,125 TSh reduces the single-person shortfall to 478,554.07 TSh, enhancing affordability and economic participation.
  • Promote Affordable Housing:
    By 2030, subsidizing rentals (e.g., capping 1-bedroom apartments at 300,000 TSh in city centers) or reducing mortgage rates (current: 14.6%, range: 10–25%) to 5% for apartments at 2,500,000 TSh/m² outside city centers can improve housing access. This encourages homeownership and wealth accumulation.
    Impact: Reducing rent to 300,000 TSh lowers single-person total costs to 1,540,012.4 TSh, cutting the shortfall to 846,679.07 TSh.

4. Economic Development Outcomes by 2030

By leveraging low costs and addressing income disparities by 2030:

  • Increased Consumer Spending: Reducing the shortfall boosts spending on non-essentials (e.g., 15,000 TSh for a bottle of wine, 77,500 TSh for Nike shoes), driving growth in retail and service sectors.
  • Human Capital Growth: Affordable childcare and education enhance workforce skills, supporting industries like technology and tourism, critical for long-term GDP growth.
  • Sustainable Growth: Attracting FDI and tourism, combined with higher wages, can reduce the 14.6% mortgage rate and expand housing markets, fostering economic resilience and inclusivity.

The table retains the key economic figures from research data, including the average monthly net salary (693,333.33 TSh), living costs (1,240,012.4 TSh for singles, 4,293,375 TSh for families), housing (1,039,418.93 TSh for city-center 1-bedroom rent), and other expenses like groceries (2,700 TSh/kg for rice), transport (725 TSh one-way ticket), utilities (168,125 TSh), and childcare (756,250 TSh/month). The "Notes" column is revised to emphasize long-term economic implications and opportunities for 2030, highlighting affordability advantages and challenges like income disparities.

CategoryAverage Cost (TSh)Range (TSh)Notes
Average Monthly Net Salary693,333.33-2025 baseline; by 2030, wage increases to ~1,240,012.4 TSh needed to cover single-person costs and reduce disparities.
Monthly Costs (Single Person, Excl. Rent)1,240,012.40-Covers groceries, dining, transport, utilities; shortfall of 546,679.07 TSh limits purchasing power, requiring policy action by 2030.
Monthly Costs (Family of Four, Excl. Rent)4,293,375.00-High costs, especially childcare (756,250 TSh), drive 3,600,041.67 TSh shortfall; subsidies critical for 2030 inclusivity.
1-Bedroom Apartment Rent (City Centre)1,039,418.93300,000.00–2,685,704.00Affordable urban housing attracts FDI and remote workers; subsidies to 300,000 TSh by 2030 can enhance affordability.
1-Bedroom Apartment Rent (Outside City Centre)454,074.67250,000.00–1,000,000.00Low costs support budget-conscious residents; key for inclusive urban growth by 2030.
3-Bedroom Apartment Rent (City Centre)1,985,841.16537,140.80–4,834,267.20High urban family housing costs; targeted subsidies needed for 2030 affordability.
3-Bedroom Apartment Rent (Outside City Centre)934,804.40300,000.00–2,685,704.00Cost-effective for families; supports rural-urban migration and growth by 2030.
Inexpensive Meal6,500.003,000.00–15,000.00Low dining costs boost tourism; maintaining affordability by 2030 supports hospitality sector growth.
Mid-Range Meal for Two (Three-Course)50,000.0030,000.00–120,000.00Affordable dining attracts tourists and locals; key for hospitality revenue by 2030.
Rice (White, 1kg)2,700.002,000.00–3,500.00Low grocery costs enable entrepreneurship; stable prices by 2030 support food security.
Milk (1 liter)2,442.111,500.00–4,000.00Essential for households; affordability supports nutrition and economic stability by 2030.
Chicken Fillets (1kg)13,400.006,000.00–18,000.00Moderate protein costs; supporting local production by 2030 reduces import reliance.
One-Way Transport Ticket (Local)725.00600.00–2,000.00Affordable transport enhances labor mobility; infrastructure investment key for 2030 growth.
Monthly Transport Pass45,000.0021,739.13–52,000.00Cost-effective for commuters; expanding access by 2030 boosts economic productivity.
Utilities (85m² Apartment, Monthly)168,125.0063,750.00–300,000.00Moderate costs; reducing to 100,000 TSh by 2030 via infrastructure improves affordability.
Mobile Plan (10GB+ Data, Monthly)27,928.5710,000.00–50,000.00Affordable connectivity supports digital economy; critical for remote work by 2030.
Internet (60 Mbps, Unlimited, Monthly)98,222.2260,000.00–150,000.00Enables digital growth; affordability key for tech sector expansion by 2030.
Preschool (Private, Full Day, Monthly)756,250.00375,000.00–1,300,000.00High costs burden families; subsidies to 200,000 TSh by 2030 enhance labor participation.
International Primary School (Yearly)23,750,000.0010,000,000.00–35,000,000.00Accessible to high earners; public education investment needed for 2030 inclusivity.
Mortgage Interest Rate (Yearly, 20-Year Fixed)14.60%10.00%–25.00%High rates limit homeownership; reducing to 5% by 2030 supports wealth accumulation.
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