Tanzania is experiencing an unprecedented surge in Foreign Direct Investment (FDI), positioning itself as East Africa’s premier investment hub. With a strong policy and infrastructure reform agenda, Tanzania is not only attracting capital but also creating jobs, transferring technology, and reducing poverty in line with its Vision 2050 of achieving a USD 1 trillion economy.

Key Trends and Performance (2023–Q3 2024/25)

• FDI Growth: FDI increased from USD 1.3–1.6 billion in 2023 to USD 6.56 billion in 2024, representing a more than 400% jump. In Q3 of 2024/25 alone, Tanzania attracted USD 1.36 billion.
• Projects & Jobs: In 2024, 901 projects were registered with a total capital of USD 9.31 billion, creating 212,293 jobs, the highest since 1991. In Q3 2024/25 alone, 24,444 jobs were created.
• GDP Growth: FDI-driven growth led to a GDP increase from 5.3% in 2023 to 5.5% in 2024, with a projection of 8% by 2030.

Main FDI Sectors

1. Manufacturing – Led all sectors with 377 projects valued at USD 3.1 billion in 2023 alone.
2. Transport & Infrastructure – Contributed over USD 1.2 billion.
3. Agriculture – Projected to attract USD 2 billion in agro-processing FDI by 2030.
4. Renewable Energy – With USD 3 billion projected by 2030, including strategic projects like the Julius Nyerere Hydropower Plant.
5. Real Estate – Driven by policy changes allowing 99-year leases, it attracted USD 185.54 million in Q3 2024/25 from UAE investors.

Policy and Institutional Reforms

• TISEZA Act 2025: Merged TIC and EPZA, introduced a USD 50 million threshold for strategic projects, expedited permits, and established a national land bank.
• National Land Policy 2023: Enabled long-term lease access to land for foreign investors.
• Tanzania Electronic Investment Window (TeIW): Reduced investment registration times from 60 to 30 days.
• One Stop Facilitation Centre (PISC): Supports 80% of investors, easing FDI logistics.

Challenges Still to Address

• Infrastructure Gaps: Only 45% of Tanzanians had electricity access in 2023, hindering scalability of SEZs.
• Land Disputes: Affect around 20% of investment projects, especially in rural zones.
• Bureaucratic Inefficiencies: 15% of FDI projects experienced delays due to poor inter-ministerial coordination.
• Foreign Exchange Shortages and regional disparities persist, particularly in Nyasa Zone.

2025–2030 Strategic Goals

• USD 15 billion in annual FDI by 2030.
• 1 million jobs created by 2030.
• USD 5 billion in infrastructure investment: 20,000 km of roads and 10,000 MW energy capacity.
• 50% of FDI projects to be joint ventures.
• 95% of all FDI applications processed digitally via TeIW.
• USD 1 billion directed to underserved regions like Nyasa Zone.

Inclusive and Sustainable Growth

Programs like Vikapu Bomba (training 5,000 women in 2024 and targeting 50,000 by 2030) and SEZs like Kibaha Textile Park (projected 38,400 jobs) emphasize inclusive development. FDI also aligns with SDG 8 (Decent Work) and SDG 13 (Climate Action) by promoting green energy and equitable employment.

Conclusion

Tanzania’s FDI trajectory showcases how robust policy, sectoral strategy, and institutional reform can unlock transformative economic growth. By addressing remaining gaps and promoting equity, Tanzania is on course to become a regional economic powerhouse by 2030.

The Tanzania Investment Centre (TIC) Quarterly Bulletin for January to March 2025 (Q3 2024/25) reports a significant 46.72% increase in capital inflow compared to the same period in the previous year (Q3 2023/24), with total capital attracted reaching USD 2,164.7 million compared to USD 1,475.43 million in Q3 2023/24. This growth, coupled with the registration of 199 investment projects expected to generate 24,444 jobs, underscores Tanzania’s robust economic development trajectory. Below, TICGL analyze the sectors driving this capital increase, supported by figures from the document, and explain how they contribute to economic diversification, a critical factor in reducing reliance on traditional sectors and fostering sustainable growth.

Sectors Driving the Capital Inflow Growth

The bulletin highlights notable increases in capital, project numbers, and job opportunities in specific sectors during Q3 2024/25, The key sectors driving the 46.72% capital increase include:

1. Agriculture:
   • Capital Increase: The bulletin notes a “notable increase” in capital in the agriculture sector, though exact capital figures per sector are not provided in the text. However, the sector’s prominence is evident from the number of projects and jobs.
   • Projects and Jobs: Agriculture saw an increase in registered projects and job opportunities. For context, the document highlights specific agricultural projects like the Bugwema Irrigation Scheme (USD 14.89 million, 2,500+ household jobs) and the Usariver Agricultural SEZ, indicating significant investment interest.
   • Figure Reference: Figure 4.2 shows a rise in the number of agricultural projects and jobs compared to Q3 2023/24, suggesting a substantial contribution to the capital inflow.
2. Energy:
   • Capital Increase: The energy sector recorded a significant increase in capital, driven by projects like solar and clean energy initiatives (e.g., inbound missions from China and India focusing on energy).
   • Projects and Jobs: The sector also saw an increase in registered projects and job creation. Figure likely reflects this growth in project numbers.
   • Example Projects: Missions from Japan (energy, February 13, 2025) and India (clean energy, March 28, 2025) indicate targeted investments.
3. Economic Infrastructure:
   • Capital Increase: This sector experienced a notable rise in capital, likely driven by projects like the East Africa Commercial & Logistics Center (EACLC) with an investment exceeding USD 200 million and infrastructure-focused missions (e.g., UAE’s logistics hub interest).
   • Projects and Jobs: The bulletin notes an increase in project numbers and jobs, with Figure 4.2 illustrating this trend.
   • Significance: The EACLC, with its 75,000 square meters and four functional areas (commercial trading, logistics, business district, leisure), is a flagship project enhancing Tanzania’s role as a regional trade hub.
4. Services:
   • Capital Increase: The services sector, encompassing tourism, real estate, and other services, also contributed to the capital surge. Inbound missions from Japan (real estate, February 2025) and Poland (tourism, January 16, 2025) highlight this focus.
   • Projects and Jobs: Figure shows growth in service-related projects and jobs, reflecting investments in tourism and hospitality.
5. Manufacturing:
   • Capital Increase: Despite a slight decrease in the number of projects, the manufacturing sector recorded a 45.87% increase in capital, making it a significant driver of the overall 46.72% capital growth.
   • Projects and Jobs: Figure indicates a slight dip in project numbers but a substantial increase in capital, suggesting larger-scale investments. Examples include Chinese investments in motorcycle assembly, tire manufacturing, and steel production.
   • Specific Investments: The bulletin lists 19 inbound missions from China alone, many focusing on manufacturing sectors like tea processing, building materials, and stainless steel.

Quantitative Breakdown

• Total Capital (Q3 2024/25): USD 2,164.7 million.
• Previous Year (Q3 2023/24): USD 1,475.43 million.
• Increase in Capital: USD 2,164.7M – USD 1,475.43M = USD 689.27 million, equivalent to a 46.72% increase.
• Projects Registered: 199 projects (94 foreign-owned, 66 locally owned, 39 joint ventures).
• Jobs Created: 24,444 jobs.
• Expansion Projects: 9 projects with USD 100.09 million in capital and 1,542 jobs.
• Sectoral Contribution:
  • Agriculture, Energy, Economic Infrastructure, and Services: Increased in projects, jobs, and capital.
  • Manufacturing: 45.87% capital increase, despite fewer projects.

Contribution to Economic Diversification

Economic diversification reduces Tanzania’s reliance on traditional sectors like agriculture and mining, fostering resilience and sustainable growth. The sectors driving the capital inflow contribute to diversification as follows:

1. Agriculture:
   • Diversification Impact: Investments like the Bugwema Irrigation Scheme (USD 14.89 million) and the Usariver Agricultural SEZ modernize agriculture, shifting from subsistence to commercial farming. The Usariver project focuses on horticulture for export, enhancing foreign exchange earnings.
   • Economic Benefits: These projects create over 2,500 household jobs (Bugwema) and boost food security, reducing dependence on rain-fed agriculture. The allocation of 30,000 hectares in Mkulazi for the “Mkulazi Agricultural City” (USD 570 million) supports large-scale agribusiness, diversifying agricultural output.
   • Figure Impact: The increase in agricultural projects supports value-added activities like processing, reducing reliance on raw commodity exports.
2. Energy:
   • Diversification Impact: Investments in solar and clean energy (e.g., Chinese solar project) reduce dependence on traditional energy sources like hydropower, enhancing energy security.
   • Economic Benefits: Energy projects support industrial growth by ensuring reliable power for manufacturing and infrastructure projects like the EACLC. This enables Tanzania to attract more industries, diversifying from agriculture-based revenue.
   • Figure Impact: The rise in energy sector capital reflects investments in renewable energy, aligning with global sustainability trends.
3. Economic Infrastructure:
   • Diversification Impact: The EACLC (USD 200 million+) integrates wholesale, logistics, warehousing, and e-commerce, positioning Tanzania as a regional trade hub. The Standard Gauge Railway (SGR) in Morogoro enhances trade connectivity, opening markets for diverse sectors like horticulture and manufacturing.
   • Economic Benefits: The EACLC is expected to create jobs and boost trade across East Africa, while the SGR supports faster transport of perishable goods, diversifying market access. These projects reduce reliance on traditional trade routes and ports.
   • Figure Impact: Figure shows 73 projects in Dar es Salaam, where EACLC is located, indicating infrastructure’s role in capital attraction.
4. Services:
   • Diversification Impact: Investments in tourism and real estate (e.g., Japanese and Polish missions) diversify Tanzania’s economy by capitalizing on its tourism potential and urban development needs.
   • Economic Benefits: Tourism projects create jobs and foreign exchange, while real estate investments (supported by the 2023 Land Policy) stimulate construction and housing markets, broadening economic activity.
   • Figure Impact: Figure shows increased service sector projects, reflecting growth in non-traditional sectors.
5. Manufacturing:
   • Diversification Impact: The 45.87% capital increase in manufacturing supports industrial growth in areas like tea processing, motorcycle assembly, and steel production. This shifts Tanzania from raw material exports to value-added manufacturing.
   • Economic Benefits: Manufacturing projects create high-skill jobs (e.g., 1,542 jobs from expansion projects) and increase export revenues. The Kibaha Textile SEZ (USD 78.85 million, 38,400 jobs) exemplifies large-scale industrial diversification.
   • Figure Impact: Figure highlights manufacturing’s capital growth, underscoring its role in economic transformation.

Broader Economic Development Impact

• Job Creation: The 24,444 jobs across these sectors reduce unemployment and increase household incomes, boosting domestic consumption and tax revenues.
• FDI and Domestic Investment: The 62.5% increase in joint ventures (39 projects) indicates growing local participation, fostering inclusive growth. Figure shows 94 foreign-owned and 66 locally owned projects, balancing FDI and domestic investment.
• Regional Distribution: Figure shows Dar es Salaam (73 projects), Pwani (48), and Arusha (16), ensuring economic activity spreads beyond urban centers, promoting balanced development.
• Policy Support: The Tanzania Investment and Special Economic Zones Authority Act and the 2023 Land Policy create a conducive environment, encouraging diverse investments. The EACLC’s alignment with the Belt & Road Initiative enhances global trade linkages.

Conclusion

The 46.72% increase in capital inflow to USD 2,164.7 million in Q3 2024/25 was driven by agriculture, energy, economic infrastructure, services, and manufacturing, as evidenced by Figure and specific project data. These sectors contribute to economic diversification by modernizing agriculture, enhancing energy security, improving trade infrastructure, expanding service industries, and boosting manufacturing. Projects like the EACLC (USD 200 million+), Kibaha Textile SEZ (USD 78.85 million), and Bugwema Irrigation Scheme (USD 14.89 million) exemplify this shift, creating jobs, increasing exports, and reducing reliance on traditional sectors. These investments, supported by reforms like TISEZA and the 2023 Land Policy, position Tanzania as a diversified, resilient economy and a leading investment destination in Africa.

This table will provide a clear, concise overview of the figures that illustrate Tanzania’s economic development during Q3 2024/25, as requested, with an emphasis on the 46.72% capital inflow increase and other key metrics.

Explanation of the Table

This table captures key figures from the bulletin that highlight Tanzania’s economic development in Q3 2024/25, focusing on investment, job creation, and sectoral contributions. Figures contribute to economic development:

• Capital Inflow (USD 2,164.7 million, 46.72% increase): Reflects strong investor confidence, driven by agriculture, energy, infrastructure, services, and manufacturing. This supports economic growth by increasing available capital for development projects.
• Projects and Jobs (199 projects, 24,444 jobs): The high number of projects and jobs boosts employment, household incomes, and tax revenues, fostering inclusive growth.
• Sectoral Growth: Manufacturing’s 45.87% capital increase and projects like the EACLC (USD 200 million+) and Kibaha Textile SEZ (USD 78.85 million) drive industrial and trade diversification.
• Agricultural Investments: Projects like Bugwema (USD 14.89 million) and Mkulazi (USD 570 million) modernize agriculture, enhancing food security and exports.
• Regional Balance: The distribution of projects across Dar es Salaam, Pwani, and Arusha promotes equitable economic development.
• 2024 Achievements: The record 901 projects and 212,293 jobs highlight a landmark year, driven by reforms like the Investment Act 2022 and the National Investment Campaign.

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.