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

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

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

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

Revenue collections for the fiscal year 2023/24

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

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

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

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

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

Tax Revenue by Zone:

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

Tax Revenue by Category:

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

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

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

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

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

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

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

1. Agricultural Resilience:

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

2. Manufacturing Growth:

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

3. Mining Sector Challenges:

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

4. Tourism Revival:

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

5. Energy Sector Expansion:

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

6. Forestry and Fishing Developments:

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

"1996–2024: Tanzania’s Tax Revenue Surge Reflects Decades of Economic Growth and Improved Compliance"

Over the past 27 years, Tanzania’s tax revenue has experienced significant growth, reflecting economic expansion and improvements in tax administration. From 1996/97 to 2023/24, revenue from key taxes such as Pay As You Earn (PAYE) increased by 8,558%, rising from 38.4 billion TShs to 3,320.6 billion TShs. Corporation Tax surged 6,433%, reaching 3,574.3 billion TShs. Value-Added Tax (VAT) on domestic goods and imports also saw notable rises, up by 5,635% and 6,726%, respectively, fueled by higher consumption and better compliance. These trends underscore Tanzania's progress in expanding its tax base and enhancing collection efficiency across sectors.

The tax revenue data over the years shows several key insights into Tanzania's economic trajectory and tax system efficiency. These figures reveal for each major category, showing how tax revenue trends reflect economic and policy developments:

1. P.A.Y.E. (Pay As You Earn)

• 1996/97: 38,357.8 million TShs
• 2023/24: 3,320,646.9 million TShs
• Growth: ~8,558% over 27 years, with an average annual increase of 20%.
• Insight: The high growth in PAYE indicates increased formal employment and income levels, likely due to economic expansion and higher workforce participation. The tax base grew as more people entered the formal economy, and incomes rose, raising PAYE collections dramatically. This can be attributed to expanding sectors like finance, telecommunications, and public sector employment.

2. Corporation Tax

• 1996/97: 54,689.7 million TShs
• 2023/24: 3,574,291.1 million TShs
• Growth: ~6,433%, with an average annual increase of 18%.
• Insight: Corporation tax growth shows a maturing business environment and expanding corporate sector profits. This is likely due to favorable economic policies and increased private investment, especially in industries such as mining, manufacturing, and financial services. The data also indicates fluctuations, with major jumps in revenue during certain years (e.g., 2015/16, 2021/22), which could reflect economic booms, reforms, or one-time revenue collections.

3. Individual Income Tax

• 1996/97: 9,117.9 million TShs
• 2023/24: 284,795.6 million TShs
• Growth: ~3,023%, averaging 16% per year.
• Insight: Increased tax revenue from individuals suggests a growing number of self-employed professionals and possibly enhanced tax compliance efforts. As Tanzania’s informal economy starts transitioning into formal setups, more individuals are paying taxes directly. This growth mirrors efforts to formalize various occupations and improve income reporting.

4. Other Income Taxes

• 1996/97: 23,442.3 million TShs
• 2023/24: 2,337,045.5 million TShs
• Growth: ~9,870%, with an average annual growth rate of 19%.
• Insight: The increase in "Other Income Taxes" points to a broader tax net, capturing income from investments, dividends, and non-salary sources. It reflects an effort by the Tanzania Revenue Authority (TRA) to diversify revenue sources beyond traditional income streams, possibly including capital gains, interest income, and rental income.

5. Domestic Excise Duty

• 1996/97: 61,923.3 million TShs
• 2023/24: 1,974,229.0 million TShs
• Growth: ~3,088%, with an average annual increase of 15%.
• Insight: Excise duty growth highlights an increase in consumption of excisable goods such as alcohol, tobacco, and fuel. The steady rise reflects both population growth and higher demand for such goods as living standards rise. Increased excise rates on high-demand goods could also contribute to the revenue increases seen in recent years.

6. Domestic VAT

• 1996/97: 67,053.2 million TShs
• 2023/24: 3,845,345.9 million TShs
• Growth: ~5,635%, with an average annual growth rate of 20%.
• Insight: This large increase in VAT collections reflects higher consumption and enhanced enforcement. As Tanzania's economy grew, so did the production and purchase of VAT-liable goods and services. Growth in retail, hospitality, and manufacturing contributed significantly. TRA’s improvements in tax administration and use of digital systems for VAT compliance also helped capture more revenue.

7. Import Duty

• 1996/97: 77,910.5 million TShs
• 2023/24: 1,845,087.5 million TShs
• Growth: ~2,268%, with an average annual increase of 13%.
• Insight: The rising import duty revenue indicates increased import volumes, particularly of consumer goods, machinery, and raw materials for industries. Tanzania’s reliance on imports for development projects, consumer demand, and industrialization contributed to this steady increase.

8. Excise Duty on Imports

• 1996/97: 29,760.1 million TShs
• 2023/24: 1,533,699.0 million TShs
• Growth: ~5,053%, averaging 17% per year.
• Insight: The significant increase in import excise duties suggests both an increase in high-demand, excise-liable imports and higher excise rates on these items. It reflects Tanzania's consumption pattern shift toward imported luxury items and vehicles, among others.

9. VAT on Import

• 1996/97: 54,909.4 million TShs
• 2023/24: 3,748,862.6 million TShs
• Growth: ~6,726%, with an average annual growth rate of 18%.
• Insight: VAT on imports grew strongly due to increasing import values and effective tax collection at entry points. Enhanced controls at borders and automation within TRA allowed for higher compliance and capture of VAT revenue.

Overall Interpretation

• Economic Growth: The rapid growth across tax categories signifies expanding economic activities, higher income levels, and greater consumption, all leading to a broader tax base.
• Improved Compliance: Higher revenue figures in later years suggest TRA’s improvements in tax compliance, including stricter enforcement, digitization of tax processes, and taxpayer education.
• Diversified Revenue Base: The increase across various tax types indicates Tanzania's successful efforts to diversify its tax base, reducing reliance on any single revenue stream and making the tax system more resilient to economic shocks.

The substantial growth across all tax categories, with PAYE, Corporation Tax, and VAT revenues leading the increase from 1996/97 to 2023/24:

The tax revenue over the years shows several key insights into Tanzania's economic trajectory and tax system efficiency

1. P.A.Y.E. (Pay As You Earn)

• 1996/97: 38,357.8 million TShs
• 2023/24: 3,320,646.9 million TShs
• Growth: ~8,558% over 27 years, with an average annual increase of 20%.
• Insight: The high growth in PAYE indicates increased formal employment and income levels, likely due to economic expansion and higher workforce participation. The tax base grew as more people entered the formal economy, and incomes rose, raising PAYE collections dramatically. This can be attributed to expanding sectors like finance, telecommunications, and public sector employment.

2. Corporation Tax

• 1996/97: 54,689.7 million TShs
• 2023/24: 3,574,291.1 million TShs
• Growth: ~6,433%, with an average annual increase of 18%.
• Insight: Corporation tax growth shows a maturing business environment and expanding corporate sector profits. This is likely due to favorable economic policies and increased private investment, especially in industries such as mining, manufacturing, and financial services. The data also indicates fluctuations, with major jumps in revenue during certain years (e.g., 2015/16, 2021/22), which could reflect economic booms, reforms, or one-time revenue collections.

3. Individual Income Tax

• 1996/97: 9,117.9 million TShs
• 2023/24: 284,795.6 million TShs
• Growth: ~3,023%, averaging 16% per year.
• Insight: Increased tax revenue from individuals suggests a growing number of self-employed professionals and possibly enhanced tax compliance efforts. As Tanzania’s informal economy starts transitioning into formal setups, more individuals are paying taxes directly. This growth mirrors efforts to formalize various occupations and improve income reporting.

4. Other Income Taxes

• 1996/97: 23,442.3 million TShs
• 2023/24: 2,337,045.5 million TShs
• Growth: ~9,870%, with an average annual growth rate of 19%.
• Insight: The increase in "Other Income Taxes" points to a broader tax net, capturing income from investments, dividends, and non-salary sources. It reflects an effort by the Tanzania Revenue Authority (TRA) to diversify revenue sources beyond traditional income streams, possibly including capital gains, interest income, and rental income.

5. Domestic Excise Duty

• 1996/97: 61,923.3 million TShs
• 2023/24: 1,974,229.0 million TShs
• Growth: ~3,088%, with an average annual increase of 15%.
• Insight: Excise duty growth highlights an increase in consumption of excisable goods such as alcohol, tobacco, and fuel. The steady rise reflects both population growth and higher demand for such goods as living standards rise. Increased excise rates on high-demand goods could also contribute to the revenue increases seen in recent years.

6. Domestic VAT

• 1996/97: 67,053.2 million TShs
• 2023/24: 3,845,345.9 million TShs
• Growth: ~5,635%, with an average annual growth rate of 20%.
• Insight: This large increase in VAT collections reflects higher consumption and enhanced enforcement. As Tanzania's economy grew, so did the production and purchase of VAT-liable goods and services. Growth in retail, hospitality, and manufacturing contributed significantly. TRA’s improvements in tax administration and use of digital systems for VAT compliance also helped capture more revenue.

7. Import Duty

• 1996/97: 77,910.5 million TShs
• 2023/24: 1,845,087.5 million TShs
• Growth: ~2,268%, with an average annual increase of 13%.
• Insight: The rising import duty revenue indicates increased import volumes, particularly of consumer goods, machinery, and raw materials for industries. Tanzania’s reliance on imports for development projects, consumer demand, and industrialization contributed to this steady increase.

8. Excise Duty on Imports

• 1996/97: 29,760.1 million TShs
• 2023/24: 1,533,699.0 million TShs
• Growth: ~5,053%, averaging 17% per year.
• Insight: The significant increase in import excise duties suggests both an increase in high-demand, excise-liable imports and higher excise rates on these items. It reflects Tanzania's consumption pattern shift toward imported luxury items and vehicles, among others.

9. VAT on Import

• 1996/97: 54,909.4 million TShs
• 2023/24: 3,748,862.6 million TShs
• Growth: ~6,726%, with an average annual growth rate of 18%.
• Insight: VAT on imports grew strongly due to increasing import values and effective tax collection at entry points. Enhanced controls at borders and automation within TRA allowed for higher compliance and capture of VAT revenue.

Overall Interpretation

• Economic Growth: The rapid growth across tax categories signifies expanding economic activities, higher income levels, and greater consumption, all leading to a broader tax base.
• Improved Compliance: Higher revenue figures in later years suggest TRA’s improvements in tax compliance, including stricter enforcement, digitization of tax processes, and taxpayer education.
• Diversified Revenue Base: The increase across various tax types indicates Tanzania's successful efforts to diversify its tax base, reducing reliance on any single revenue stream and making the tax system more resilient to economic shocks.

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

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

Notes:

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

Explanation:

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

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

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

Regional Variations in Revenue

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

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

Conclusion

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

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

Activities across zones

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

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

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

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

Across different zones and GDP per capita

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

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

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

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

Tanzania's GDP highlights several key points

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

Opportunities, Challenges, and the Road to 2030

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

1. Market Distribution and Sector Dynamics

SMEs are concentrated in four primary sectors:

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

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

2. Financial and Resource Accessibility

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

Figures:

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

3. Regulatory Challenges and Policy Initiatives

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

Figures:

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

4. Investment Landscape and Opportunities

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

Figures:

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

5. Projections for 2030 and Conclusion

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

2030 Projections:

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

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

Growth, Challenges, and Future Prospects

Introduction

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

Sector Growth and Digital Transformation

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

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

Challenges Facing the Sector

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

Investment Opportunities

The banking sector’s future promises numerous investment opportunities:

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

Future Outlook: Banking in Tanzania by 2030

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

Conclusion and Recommendations

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