Tanzania External Sector Performance 2026 | Current Account, Exports & Imports | TICGL
Bank of Tanzania · March 2026 · External Sector
Tanzania's External Sector Performance
A comprehensive TICGL analysis of Tanzania's engagement with the global economy — tracing the flows of goods, services, and capital that shape trade competitiveness, tourism strength, and import dependency in 2026.
Exports G&S (yr Feb-26)
$18.4Bn
▲ +12.4% YoY
Tourism Receipts
$4,352M
▲ +9.3% YoY
Gold Exports
$4,968M
▲ +35.8% YoY
Imports G&S (yr Feb-26)
$18.6Bn
▲ +9.1% YoY
Current Account Deficit
$2,108M
▼ Narrowing from $2,156M
Current Account Deficit
$2,108M
▼ Narrowed $48.1M YoY
Total Exports G&S
$18,393M
▲ +12.4% (yr Feb 2026)
Services Receipts
$7,520M
▲ +8.8% YoY
Total Imports G&S
$18,634M
▲ +9.1% (yr Feb 2026)
Service Payments
$3,355M
▲ +17.8% YoY
Current Account Balance
Tanzania's Current Account: A Narrowing Deficit
The current account deficit narrowed to USD 2,108.2 million for the year ending February 2026, compared to USD 2,156.3 million in the corresponding period of 2025 — a modest improvement of USD 48.1 million (2.2%). This improvement was powered by a strong goods export performance, particularly gold, and continued growth in tourism services receipts.
Headline Finding: Tanzania's current account deficit as a share of GDP is estimated at approximately -2.2% for 2025 — an improvement from -2.9% in 2024 and well below the -7.1% recorded during the 2022 commodity price shock. The narrowing deficit reflects improved export competitiveness, rising tourism, and softer global oil prices reducing the import bill.
Current Account Components — Year Ending February 2026 vs 2025 (USD Million)
Goods account, services account, primary income, secondary income balances
ACCOUNT STRUCTURE
Source: Bank of Tanzania — Table 2.7.1 Current Account (Year Ending February)
Current Account Deficit Trend (Annual)
USD Million — 2021 to 2026 (yr Feb)
ANNUAL TREND
Source: Table A5 — Tanzania Balance of Payments
Monthly Current Account Balance (Feb 2025–Feb 2026)
USD Million — monthly outturn
MONTHLY
Source: Bank of Tanzania — Table 2.7.1 Monthly data
Trade Flow Balance — Year Ending February 2026 (USD Million)
Goods & Services — Export vs ImportDeficit: USD 241.0M
Exports $18,393M
Imports $18,634M
0$9,000M$18,000M$37,000M
GOODS ACCOUNT
-$4,407M
Exports $10,873M vs Imports $15,279M
SERVICES ACCOUNT
+$4,166M
Receipts $7,520M vs Payments $3,355M
NET CURRENT ACCOUNT
-$2,108M
▼ Improved from -$2,156M (Feb 2025)
Exports of Goods & Services
Total Exports Rose 12.4% to USD 18,393.2 Million
Tanzania's export engine fired strongly in the year to February 2026. Total goods and services exports grew 12.4% to USD 18,393.2 million, powered by a 35.8% surge in gold exports, robust tourism receipts, and manufactured goods. Goods exports alone grew 15.0%, while services exports expanded 8.8%.
Exports of Goods & Services — Category Breakdown (Year Ending Feb 2022–2026)
USD Million — Gold, Travel/Tourism, Transport, Manufactured Goods, Traditional, Other
EXPORT STRUCTURE
Source: Bank of Tanzania — Table 2.7.2 (Exports of Goods & Services) & Chart 2.7.2
Export Composition — Year Ending Feb 2026
% share of total USD 18,393M in exports
COMPOSITION
Source: Table 2.7.1 & 2.7.2 — Bank of Tanzania
Export Growth Rates by Category (YoY %)
Year ending Feb 2025 → Feb 2026
YoY GROWTH
Source: Bank of Tanzania — Computed from Table 2.7.2 data
🥇 Gold: Tanzania's Dominant Export Engine in 2026
Gold exports surged 35.8% to USD 4,968.4 million in the year to February 2026, from USD 3,658.9 million a year earlier — driven by favourable global gold prices, which averaged USD 5,019.97 per troy ounce in February 2026 (up from USD 2,894.73 in February 2025, a gain of over 73%). Gold now accounts for approximately 45.7% of total goods exports and represents Tanzania's single largest export by value. This concentration creates both opportunity (as gold prices remain elevated) and risk (vulnerability to commodity price reversals). Diversification into manufactured goods — which grew 26.1% to USD 1,705.1 million — signals an emerging shift toward value-added production.
Services Receipts by Category
Services Exports: USD 7,520.3 Million — Up 8.8%
Tanzania's services sector continued its upward trajectory in the year ending February 2026, with total receipts rising 8.8% to USD 7,520.3 million. Three categories dominate: Tourism (Travel), Transport, and Other Services. Tourism remains the crown jewel, while freight/transport income reflects Tanzania's growing role as a transit corridor for landlocked neighbours.
Services Surplus: Tanzania's services account recorded a surplus of USD 4,165.5 million in the year to February 2026 — receipts of USD 7,520.3 million against payments of USD 3,354.9 million. This services surplus is the key offset against the large goods trade deficit (USD 4,406.5 million), making the services sector Tanzania's economic stabilizer in the external accounts.
Services Receipts by Category — Year Ending February 2024, 2025 & 2026 (USD Million)
Travel (Tourism), Transport (Freight), and Other Services
SERVICES RECEIPTS
Source: Bank of Tanzania — Chart 2.7.3 & Table 2.7.1 Services Account
Services Receipts Composition — Feb 2026
% share of USD 7,520.3M total services receipts
COMPOSITION
Source: Table 2.7.1 — Bank of Tanzania Computations
Monthly Services Receipts (Feb 2025–Feb 2026)
Monthly actual — USD Million
MONTHLY TREND
Source: Bank of Tanzania — Table 2.7.1 monthly data
Services Receipts: 2025 vs 2026 Comparison
Year ending February — bars show 2025 (light) vs 2026 (solid)
🚢 Transport (Freight)2025: USD 2,385.4M → 2026: USD 2,726.0M+14.3%
⚙️ Other Services2025: USD 547.2M → 2026: USD 442.0M-19.2%
TOTAL Services Receipts2025: USD 6,913.9M → 2026: USD 7,520.3M +8.8%
Tourism Analysis
Tourism: Tanzania's Largest Services Export at USD 4,352.3 Million
Tourism (Travel) remains Tanzania's largest single services export category, accounting for 57.9% of total services receipts. The year to February 2026 saw tourism receipts grow 9.3% to USD 4,352.3 million, supported by a 4.2% increase in international tourist arrivals to 2,255,006 visitors. Tanzania's world-class wildlife, Zanzibar beaches, and Kilimanjaro continue to attract high-value visitors.
Tourism Receipts Trend — Year Ending February
USD Million (2022 to 2026)
TOURISM TREND
Source: Banks & Bank of Tanzania — Chart 2.7.3
Tourist Arrivals vs Tourism Revenue (Indexed 2022=100)
Arrivals and receipts indexed — shows revenue/visitor efficiency
EFFICIENCY INDEX
Source: Bank of Tanzania — Tourist arrival and receipts data 2022–2026
🌴 TICGL Tourism Insight: Revenue per Visitor is Rising
With tourist arrivals growing 4.2% but receipts rising 9.3%, Tanzania's revenue per visitor is increasing — from approximately USD 1,758 per arrival in 2025 to an estimated USD 1,930 in 2026. This signals both higher-value tourist segments (luxury safari, premium beach) and longer average stays. TICGL identifies the tourism-adjacent investment universe — hospitality, logistics, MICE (meetings, incentives, conferences, exhibitions), and cultural tourism — as among Tanzania's highest-potential sectors for foreign direct investment in 2026–2028.
Imports of Goods & Services
Total Imports Rose 9.1% to USD 18,634.2 Million
Imports of goods and services rose to USD 18,634.2 million in the year ending February 2026, reflecting higher demand for productive inputs — industrial supplies, transport equipment, machinery, and freight services. A key positive: oil imports declined 16.6% to USD 2,110.2 million, driven by softer global petroleum prices, partially offsetting the broad import increase.
Oil Import Relief: Oil imports fell 16.6% from USD 2,529.7 million to USD 2,110.2 million — a saving of USD 419.5 million in the import bill. This directly reflects softer global crude oil prices and contributed significantly to the narrowing current account deficit. However, industrial supplies imports rose sharply to USD 5,537.6 million (+16.5%), signalling continued productive investment by Tanzania's private sector.
Imports of Goods & Services — Category Breakdown (Year Ending Feb 2022–2026)
USD Million — Industrial Supplies, Oil, Transport Equipment, Machinery, Freight, Other
IMPORT STRUCTURE
Source: Bank of Tanzania — Table 2.7.4 & Chart 2.7.4 (Imports of Goods & Services)
Import Composition — Year Ending Feb 2026
% share of total USD 18,634.2M in imports
COMPOSITION
Source: Bank of Tanzania — Table 2.7.4
Top Import Categories: 2025 vs 2026 (USD Million)
Year ending February — key import items compared
YoY COMPARISON
Source: Bank of Tanzania — Table 2.7.4
Services Payments
Services Payments: USD 3,354.9 Million — Up 17.8%
Service payments grew 17.8% to USD 3,354.9 million in the year ending February 2026, driven primarily by higher freight costs aligned with Tanzania's growing import bill. Transport (freight) payments dominate at USD 1,541.1 million, followed by Other Services at USD 1,074.6 million, and Travel at USD 739.2 million.
Freight Cost Burden: Transport/freight payments rose to USD 1,541.1 million from USD 1,406.0 million (+9.6%), tracking the 9.1% rise in total imports. As Tanzania's import volume grows — particularly in capital and industrial goods — freight costs will remain a structural component of the services payment bill. Developing Tanzania's own maritime and logistics capabilities is a key lever for reducing this outflow.
Services Payments by Category — Year Ending February 2024, 2025 & 2026 (USD Million)
Freight/Transport, Travel, and Other Services outflows
SERVICES PAYMENTS
Source: Bank of Tanzania — Chart 2.7.5 & Table 2.7.1 Services Payments
Services Receipts vs Payments — Net Balance
Year ending February 2022–2026 (USD Million)
NET SERVICES
Source: Bank of Tanzania — Table 2.7.1 Services Account
Services Payments Composition — Feb 2026
% share of USD 3,354.9M total payments
COMPOSITION
Source: Bank of Tanzania — Table 2.7.5 data
Services Payments: 2025 vs 2026 Comparison
Year ending February — bars show 2025 (light) vs 2026 (solid)
YoY COMPARISON
🚢 Transport (Freight)2025: USD 1,406.0M → 2026: USD 1,541.1M+9.6%
⚙️ Other Services2025: USD 892.8M → 2026: USD 1,074.6M+20.4%
TOTAL Services Payments2025: USD 2,847.6M → 2026: USD 3,354.9M +17.8%
⚠️ Watch: Services Payments Growing Faster Than Receipts
Services payments grew at 17.8% in the year to February 2026, significantly faster than services receipts at 8.8%. While Tanzania still runs a comfortable services surplus (receipts exceed payments by USD 4,165.5M), the rate of divergence warrants monitoring. The primary driver is travel payments surging 34.7% — reflecting higher outbound travel by residents and business travelers — alongside rising freight costs and growing use of international financial, insurance, and professional services. For the services surplus to remain robust, tourism receipts must continue outpacing these growing payment outflows.
Complete Data Reference
Full External Sector Data Tables
All figures sourced directly from the Bank of Tanzania March 2026 Monthly Economic Review. Values in USD millions unless stated.
Table 1: Current Account Summary (USD Million)
Item
Feb-25
Jan-26
Feb-26p
Yr Feb 2024
Yr Feb 2025
Yr Feb 2026p
% Change (Yr)
Goods Account (Net)
-228.5
-292.4
-287.1
-5,996.1
-4,782.3
-4,406.5
▼ Improving -7.9%
Goods Exports
710.0
1,083.6
965.2
7,794.3
9,451.6
10,872.9
+15.0%
Goods Imports
938.5
1,376.0
1,252.3
13,790.4
14,233.9
15,279.3
+7.3%
Services Account (Net)
370.4
305.3
323.6
4,010.2
4,066.3
4,165.5
+2.4%
Services Receipts
598.8
606.8
608.6
6,340.1
6,913.9
7,520.3
+8.8%
Services Payments
228.4
301.5
285.0
2,329.9
2,847.6
3,354.9
+17.8%
G&S Balance
141.9
12.9
36.5
-1,985.9
-716.0
-241.0
▼ Improving -66.3%
Total Exports G&S
1,308.8
1,690.4
1,573.8
14,134.4
16,365.5
18,393.2
+12.4%
Total Imports G&S
1,167.0
1,677.5
1,537.3
16,120.3
17,081.5
18,634.2
+9.1%
Primary Income Account
-162.9
-199.7
-218.7
-1,531.6
-1,971.8
-2,133.0
+8.2%
Secondary Income Account
16.9
27.7
27.7
699.6
531.5
265.8
-50.0%
CURRENT ACCOUNT BALANCE
-4.2
-159.1
-154.4
-2,818.0
-2,156.3
-2,108.2
▼ Improving -2.2%
Table 2: Services Receipts by Category (USD Million)
Category
Feb-25
Jan-26
Feb-26p
Yr Feb 2024
Yr Feb 2025
Yr Feb 2026p
% Change
Share 2026
Travel (Tourism)
—
—
—
3,495.3
3,981.3
4,352.3
+9.3%
57.9%
Transport (Freight)
—
—
—
2,297.1
2,385.4
2,726.0
+14.3%
36.2%
Other Services
—
—
—
547.8
547.2
442.0
-19.2%
5.9%
TOTAL Services Receipts
598.8
606.8
608.6
6,340.1
6,913.9
7,520.3
+8.8%
100%
Table 3: Services Payments by Category (USD Million)
Category
Feb-25
Jan-26
Feb-26p
Yr Feb 2024
Yr Feb 2025
Yr Feb 2026p
% Change
Share 2026
Transport (Freight)
—
—
—
1,283.8
1,406.0
1,541.1
+9.6%
45.9%
Other Services
—
—
—
640.9
892.8
1,074.6
+20.4%
32.0%
Travel
—
—
—
405.2
548.9
739.2
+34.7%
22.0%
TOTAL Services Payments
228.4
301.5
285.0
2,329.9
2,847.6
3,354.9
+17.8%
100%
Table 4: Top Goods Exports — Year Ending February 2025 vs 2026 (USD Million)
Export Item
Yr Feb 2025
Yr Feb 2026p
Change (USD M)
% Change
Gold
3,658.9
4,968.4
+1,309.5
+35.8%
Travel (Tourism)
3,981.3
4,352.3
+371.0
+9.3%
Transportation
2,385.4
2,726.0
+340.6
+14.3%
Manufactured Goods
1,351.8
1,705.1
+353.3
+26.1%
Tobacco
525.4
625.7
+100.3
+19.1%
Cashewnuts
522.3
493.5
-28.8
-5.5%
Horticultural Products
499.3
465.1
-34.2
-6.9%
Coffee
323.5
403.8
+80.3
+24.8%
Oil Seeds
297.7
272.0
-25.7
-8.6%
Cereals
328.1
198.9
-129.2
-39.4%
TICGL Strategic Analysis
External Sector: What It Means for Tanzania's Investment Climate
TICGL's strategic interpretation of Tanzania's external sector data for investors, trade partners, and policy-focused stakeholders.
Tourism receipts of USD 4,352.3 million make Tanzania one of Africa's top tourism earners. With 2,255,006 arrivals growing 4.2% and revenue up 9.3%, revenue per visitor is rising — a healthy signal for premium positioning. Investments in hospitality, eco-tourism infrastructure, and air connectivity will yield strong returns in a sector that is structurally undercapacity.
🥇
Gold Price Windfall: A One-Time Boost or New Normal?
Gold exports surged USD 1.3 billion (+35.8%) on the back of global gold prices rising from ~$2,895 to ~$5,020 per troy oz. While this is partly a price windfall, Tanzania's gold production capacity is also expanding through artisanal sector reforms. The risk: heavy gold concentration (45.7% of goods exports) creates vulnerability if prices correct. Diversification into manufactured goods (+26.1%) is the right strategic direction.
📦
Capital Goods Imports: Productive Investment Signal
Capital goods imports rose to USD 3,649.9 million (+24.1%), led by machinery, industrial transport equipment, and electrical equipment. This composition of imports — dominated by productive assets rather than consumption — is a positive signal for future output capacity. It confirms that Tanzania's private sector is investing in expansion, backed by strong credit growth (24.4%) in the banking sector.
⛵
Freight Payments: The Hidden Import Cost
Freight payments of USD 1,541.1 million represent 45.9% of all services payments and 8.3% of total goods imports — a significant cost leakage. As import volumes grow, freight costs will continue rising unless Tanzania develops stronger domestic maritime, rail, and logistics capacity. Port of Dar es Salaam expansion and the Central Corridor railway project are directly addressing this vulnerability.
📉
Narrowing CAD: Structural or Cyclical?
The current account deficit narrowed from USD 2,156.3M to USD 2,108.2M — modest improvement. The improvement is partly structural (gold export expansion, tourism growth) and partly cyclical (oil price relief saving USD 419M). The secondary income account halved to USD 265.8M due to declining remittances — a vulnerability that needs monitoring as diaspora transfers are a key balance-of-payments stabilizer.
Tanzania's services surplus of USD 4,165.5 million nearly offsets the entire goods deficit of USD 4,406.5 million. This is remarkable: it means Tanzania's tourism and transport services industries are functioning as a near-complete hedge against the country's trade gap in physical goods. Protecting and expanding this services surplus — primarily through tourism — is the single most important external balance policy priority.
🔭 TICGL External Sector Outlook: Key Variables for 2026
Three forces will shape Tanzania's external balance through the rest of 2026: (1) Gold prices — with prices near USD 5,020/oz, any correction would immediately impact export earnings; TICGL monitors this as the single highest-impact variable. (2) Tourism recovery momentum — with tourist arrivals growing 4.2% and revenue per visitor rising, Tanzania is well-positioned for a strong H2 2026 safari and beach season; Air Tanzania's route expansion is a direct positive catalyst. (3) Global freight rates — the Strait of Hormuz tensions cited in the BoT report are raising freight costs; any escalation increases Tanzania's services payment burden while also inflating the import bill. Net result: the current account should remain in the USD 2.0–2.2 billion deficit range for full-year 2026, broadly stable.
🌍 Track Tanzania's Trade & External Balance in Real Time
TICGL's Business Intelligence Dashboard provides live and historical data on Tanzania's exports, imports, tourism receipts, current account, and balance of payments — giving investors the edge they need to navigate Tanzania's evolving external economy.
TICGL Economic Intelligence · BoT MER March 2026 · Section 3.0
Zanzibar Economic Performance February 2026
A comprehensive review of the Zanzibar economy covering inflation trends, government fiscal operations, and external sector performance — including the island's surging current account surplus driven by record clove harvests and robust tourism receipts.
Zanzibar's headline inflation remained stable at 4.8 percent year-on-year in February 2026 — unchanged from the same period in 2025. On a month-on-month basis the rate eased sharply to 0.5 percent from 2.3 percent in January 2026. The overall outturn masks a significant divergence: food prices are running hot at 9.3 percent, while non-food inflation has collapsed to just 1.4 percent, driven by moderation in housing, water, electricity, gas and fuel costs.
📊
Headline Inflation (Annual)
4.8%
Feb-26 · Stable vs 4.8% Feb-25 · Eased from 4.3% Jan-26
🌾
Food Inflation (Annual)
9.3%
Feb-26 · Up from 5.8% Feb-25 · Driven by seasonal pressures
🏠
Non-Food Inflation (Annual)
1.4%
Feb-26 · Down sharply from 4.1% Feb-25 · Housing & utilities eased
📅
Month-on-Month (Feb-26)
0.5%
Eased from 2.3% in Jan-26 · Food MoM flat at 0.0%
Annual Inflation Rates — Feb-25 to Feb-26
Headline, Food & Non-Food Inflation (%) · Base: July 2022=100
Select CPI Categories — Annual Change (Feb-26)
Year-on-Year Percentage Change by Main Group
Table 3.1.1 — Inflation Developments, Zanzibar
Base: July 2022=100 · Source: Office of the Chief Government Statistician
Main Group
Weight (%)
MoM Feb-25
MoM Jan-26
MoM Feb-26
Annual Feb-25
Annual Jan-26
Annual Feb-26
🌾 Food & Non-Alcoholic Beverages
41.9
−0.1
4.7
0.0
6.4
9.1
9.2
🍺 Alcoholic Beverages, Tobacco & Narcotics
0.2
3.4
0.0
0.0
1.0
6.6
3.1
👗 Clothing & Footwear
6.3
0.1
0.5
0.3
2.8
3.0
3.1
🏠 Housing, Water, Electricity, Gas & Other Fuels
25.8
−0.2
−0.5
2.0
5.2
−2.3
−0.2
🛋️ Furnishings, Household Equipment & Maintenance
4.8
0.4
1.8
0.2
3.6
3.0
2.8
🏥 Health
1.3
0.0
0.0
0.0
−2.0
1.4
1.4
🚗 Transport
9.1
0.2
0.7
0.4
1.4
2.0
2.2
📱 Information & Communication
4.2
0.0
−0.3
0.0
3.3
−0.1
−0.1
🎭 Recreation, Sport & Culture
1.1
0.0
−0.1
0.0
3.4
4.1
4.1
📚 Education
1.6
0.0
1.1
0.0
2.6
1.9
1.9
🍽️ Restaurants & Accommodation Services
1.4
0.0
5.4
0.0
0.6
7.1
7.1
💳 Insurance & Financial Services
0.5
0.0
0.0
0.0
0.0
0.0
0.0
💄 Personal Care & Miscellaneous Goods
1.7
0.3
0.1
0.6
3.5
1.8
2.2
📋 All Items — Headline Inflation
100.0
0.0
2.3
0.5
4.8
4.3
4.8
Selected Groups
🌾 Food (Total)
40.5
−0.1
4.8
0.0
5.8
9.2
9.3
🏙️ Non-Food
59.5
0.0
0.3
0.9
4.1
0.4
1.4
Source: Office of the Chief Government Statistician · Base: July 2022 = 100
3.2 Government Budgetary Operations
Zanzibar's government revenue performance in February 2026 was broadly strong, with domestic revenue exceeding target by 4.4 percent. Tax revenue drove collections across all categories, reflecting improved administration and compliance. However, total expenditure of TZS 407.7 billion — heavily skewed toward development spending at 61.5 percent — resulted in a fiscal deficit of TZS 222.5 billion, financed entirely through borrowing.
💰 Revenue Collections — February 2026
TZS Billions · Actual vs 2026 Estimates · Source: Ministry of Finance and Planning, Zanzibar
🛃 Tax on ImportsTZS 34.6B / Est. 41.2B
84.0% of estimate · Actual TZS 34.6B vs Est. 41.2B
📦 VAT & Excise (Local)TZS 29.4B / Est. 39.6B
74.2% of estimate
💼 Income TaxTZS 41.2B / Est. 16.0B
257.5% of estimate · Significant overperformance
🏷️ Other TaxesTZS 26.9B / Est. 16.0B
168.1% of estimate
📋 Non-Tax RevenueTZS 14.4B / Est. 16.0B
90.0% of estimate
🎁 GrantsTZS 10.9B / Est. 2.8B
389.3% of estimate
💸 Expenditure — February 2026
TZS Billions · Actual vs 2026 Estimates · Total Expenditure: TZS 407.7B
👷 Wages & SalariesTZS 67.2B / Est. 67.2B
100.0% of estimate · On target
🔄 Other Recurrent ExpenditureTZS 89.7B / Est. 95.5B
93.9% of estimate · Includes domestic debt interest
🏗️ Development ExpenditureTZS 250.8B / Est. 188.0B
133.4% of estimate · 61.5% of total expenditure
Total Revenue & Grants
185.2B
TZS · 95.6% of target
Fiscal Deficit
222.5B
TZS · Financed via borrowing
⚠️ Development expenditure funded 88.3% from domestic sources
Government Revenue by Category (Feb-26 vs 2025 Actuals vs 2026 Estimates)
TZS Billions
Government Expenditure by Category (Feb-26 vs 2025 Actuals vs 2026 Estimates)
TZS Billions
Source: Ministry of Finance and Planning, Zanzibar · Note: Actual figures for 2026 are provisional. Other taxes include hotel and restaurant levies, tour operator levy, revenue stamps, airport/seaport service charges, road development fund and petroleum levy.
3.3 External Sector Performance
Zanzibar's external sector delivered an outstanding performance in the year ending February 2026, with the current account surplus surging 29.2 percent to USD 912.1 million. The improvement was driven by a combination of strong tourism receipts, record clove harvests, manufactured goods exports, and growth in seaweed production — the island's four pillars of export earnings.
⚖️
Current Account Surplus
$912.1M
Year ending Feb-26 · ▲ +29.2% from $705.9M (2025)
📤
Total Exports
$1,625M
Year ending Feb-26 · ▲ +25.5% YoY · Services 94.9%
📥
Total Imports
$743.9M
Year ending Feb-26 · ▲ +22.8% YoY · Capital goods surging
✈️
Services Receipts
$1,542.7M
Year ending Feb-26 · ▲ +22.4% YoY · Tourism dominant
Current Account Balance — 2025 vs 2026
USD Millions · Year Ending February
Monthly Current Account — Feb-25, Jan-26, Feb-26
USD Millions · Monthly Figures
Table 3.3.1 — Current Account, Zanzibar
Millions of USD · Source: Tanzania Revenue Authority, Banks & Bank of Tanzania
Description
Feb-25
Jan-26
Feb-26p
2025 (Yr-Feb)
2026p (Yr-Feb)
% Change
Goods Account
Exports (fob)
1.3
7.2
7.1
34.2
82.2
▲ +140.4%
Imports (fob)
40.4
84.0
64.6
507.1
630.7
▲ +24.4%
Goods Account (Net)
−39.1
−76.9
−57.5
−472.9
−548.5
▼ −16.0%
Services Account
Receipts
137.4
166.4
144.2
1,260.1
1,542.7
▲ +22.4%
Payments
7.9
13.6
10.2
98.5
113.2
▲ +14.9%
Services Account (Net)
129.5
152.8
134.0
1,161.6
1,429.5
▲ +23.1%
Goods & Services (Net)
90.3
75.9
76.5
688.7
881.1
▲ +27.9%
Exports of Goods & Services
138.7
173.6
151.3
1,294.4
1,625.0
▲ +25.5%
Imports of Goods & Services
48.4
97.6
74.8
605.7
743.9
▲ +22.8%
Primary Income (Net)
0.7
0.4
1.4
15.3
27.7
▲ +81.3%
Secondary Income (Net)
0.1
0.2
0.3
1.9
3.4
▲ +75.3%
CURRENT ACCOUNT BALANCE
91.1
76.6
78.1
705.9
912.1
▲ +29.2%
Source: Tanzania Revenue Authority, Banks, and Bank of Tanzania computations · p = provisional · fob = free on board
Exports of Goods
Export of goods more than doubled year-on-year to USD 82.2 million, driven almost entirely by a bumper clove harvest — Zanzibar's signature export commodity. Clove exports surged to USD 33.9 million in the year ending February 2026, with volumes rising to 5,500 tonnes at an average unit price of USD 6,157 per tonne. Manufactured goods also registered remarkable growth of 71.9 percent to USD 22.5 million.
🌿
Clove Exports: A Bumper Harvest Story
Zanzibar's clove production experienced exceptional growth in the year ending February 2026, with export value surging from USD 4.8 million to USD 33.9 million — a more-than-sixfold increase. This follows years of subdued output and reflects both improved agronomic conditions and favourable global spice pricing. The unit price rose from USD 3,979 per tonne (2025) to USD 6,157 per tonne (2026).
5,500T
Volume (2026)
$6,157
USD/Tonne
$33.9M
Export Value
Exports of Goods — Year Ending Feb-25 vs Feb-26
USD Thousands · Traditional & Non-Traditional
Clove Export: Value, Volume & Unit Price Trend
Monthly · USD & Tonnes · Feb-25 to Feb-26
Table 3.3.2 — Exports of Goods, Zanzibar
Millions of USD · Source: Tanzania Revenue Authority & Bank of Tanzania
Commodity / Category
Units
Feb-25
Jan-26
Feb-26p
2025 (Yr-Feb)
2026p (Yr-Feb)
% Change
🌿 Traditional Exports — Clove
Value
USD '000
185.1
2,588.1
4,806.2
4,825.5
33,867.6
▲ +601.6%
Volume
'000 Tonnes
0.0
0.4
0.7
1.2
5.5
▲ +358%
Unit Price
USD/Tonne
5,858.0
6,901.5
6,859.9
3,978.8
6,156.7
▲ +54.7%
🌊 Non-Traditional Exports — Seaweeds
Value
USD '000
399.8
11.5
52.6
3,939.2
5,259.5
▲ +33.5%
Volume
'000 Tonnes
0.6
0.0
0.1
6.9
9.3
▲ +35.2%
Unit Price
USD/Tonne
643.1
408.2
560.3
570.3
563.2
▼ −1.3%
🏭 Manufactured Goods
USD '000
511.3
867.4
841.6
13,082.5
22,489.8
▲ +71.9%
🐟 Fish & Fish Products
USD '000
4.9
104.3
65.3
1,858.3
2,246.5
▲ +20.9%
🎁 Other Exports (Souvenirs, Spices)
USD '000
203.5
3,607.1
1,325.9
10,536.6
18,379.2
▲ +74.4%
TOTAL GOODS EXPORTS
USD ('000)
1,304.6
7,178.3
7,091.5
34,242.1
82,242.5
▲ +140.2%
Source: Tanzania Revenue Authority and Bank of Tanzania · p = provisional · "---" denotes change exceeding 100%
Imports of Goods
Total imports of goods and services rose 22.8 percent to USD 743.9 million in the year ending February 2026. The increase was concentrated in capital goods — particularly industrial transport equipment and electrical machinery — signalling continued investment in Zanzibar's infrastructure and productive capacity. Fuel imports declined 28.5 percent, reflecting softer global petroleum prices.
Imports by Category — 2025 vs 2026
USD Millions · Year Ending February
Import Category Share — February 2026
% of Total Imports · Capital vs Intermediate vs Consumer
Table 3.3.3 — Imports of Goods, Zanzibar (Selected Lines)
Millions of USD · Source: Tanzania Revenue Authority & Bank of Tanzania
Category / Item
Feb-25
Jan-26
Feb-26p
2025 (Yr-Feb)
2026p (Yr-Feb)
% Change
🏗️ Capital Goods
Machinery & Mechanical Appliances
0.7
7.9
5.3
21.8
43.2
▲ +98.2%
Industrial Transport Equipment
0.8
21.7
8.0
20.6
43.0
▲ +108.7%
Electrical Machinery & Equipment
0.6
7.9
5.1
12.8
34.2
▲ +167.2%
Capital Goods Total
2.7
39.0
19.5
60.4
133.1
▲ +120.4%
⚙️ Intermediate Goods
Industrial Supplies
6.7
21.6
16.7
110.0
175.1
▲ +59.2%
Fuel & Lubricants
16.8
11.5
10.7
159.7
114.2
▼ −28.5%
Parts & Accessories
0.8
1.7
3.1
15.6
28.5
▲ +82.7%
Intermediate Goods Total
32.8
37.0
35.7
379.1
403.8
▲ +6.5%
🛍️ Consumer Goods
Food & Beverages (Household)
1.2
1.8
1.8
17.3
17.9
▲ +3.5%
Other Consumer Goods
3.6
4.2
6.7
48.2
70.6
▲ +46.5%
Consumer Goods Total
5.0
8.1
9.4
67.6
93.8
▲ +38.8%
TOTAL IMPORTS (f.o.b)
40.4
84.0
64.6
507.1
630.7
▲ +24.4%
Source: Tanzania Revenue Authority and Bank of Tanzania · p = provisional · f.o.b = free on board
TICGL Analytical Commentary
TICGL's independent research interpretation of Zanzibar's February 2026 economic data — covering inflation risks, fiscal dynamics, and the structural drivers of the island's external sector performance.
🔍 Five Key Observations from TICGL Research
1. Food Inflation at 9.3% Demands Targeted Policy Response. While headline inflation held steady at 4.8% year-on-year, the food component surged from 5.8% (Feb-25) to 9.3% (Feb-26). With food carrying a 41.9% weight in Zanzibar's CPI basket — the largest single category — this divergence signals acute affordability stress for lower-income households. The fall in non-food inflation to 1.4% (from 4.1%) masks the real burden being borne by food-dependent households. TICGL recommends targeted social protection measures and food supply chain interventions to address this imbalance.
2. Clove Boom Provides a Structural Window — But Diversification Remains Essential. The more-than-sixfold surge in clove export earnings (from USD 4.8M to USD 33.9M year-on-year) is transformative for Zanzibar's goods trade balance. However, agricultural commodity dependence introduces cyclical risk: clove yields are notoriously volatile due to biennial bearing patterns and weather sensitivity. TICGL advises investors and policymakers to view this as a strategic window to build agro-processing capacity, develop cold-chain infrastructure, and attract value-added spice processing investment — converting raw commodity revenues into durable industrial gains.
3. Services Sector — Tourism is the Backbone at 94.9% of Exports. Services receipts grew 22.4% to USD 1,542.7 million, with tourism (travel) overwhelmingly dominant. This dependency on tourism as the economic engine means Zanzibar remains acutely exposed to global travel disruptions, geopolitical shocks, and climate-related events. The island's resilience strategy must include diversification into MICE tourism, health tourism, and digital nomad infrastructure — all high-margin, low-seasonality segments where Zanzibar has competitive advantages.
4. Capital Goods Import Surge Signals Investment Acceleration. Capital goods imports more than doubled year-on-year (USD 60.4M → USD 133.1M), with industrial transport equipment and electrical machinery recording triple-digit growth. This surge likely reflects construction activity tied to hotel expansion, port infrastructure, and renewable energy projects. The decline in fuel imports (−28.5%) alongside rising capital goods is a positive structural signal — suggesting the economy is shifting from consumption-driven imports toward investment-driven imports, which generate productive capacity and future export capability.
5. Fiscal Deficit Management Needs Structural Attention. The TZS 222.5 billion fiscal deficit, financed entirely through borrowing, alongside development expenditure running at 133% of estimates, raises questions about expenditure control and fiscal sustainability. Positively, 88.3% of development financing was domestically sourced, reducing foreign exchange exposure. However, sustained domestic borrowing for capital spending could crowd out private sector credit if not balanced by revenue mobilisation. TICGL recommends an accelerated push to expand the non-tax revenue base — particularly through tourism levies, marine park fees, and PPP-structured infrastructure — to reduce reliance on debt financing for development.
Explore More TICGL Research
Deepen your knowledge of Tanzania's economy with related TICGL intelligence resources.
Disclaimer & Source Attribution: All data on this page is sourced exclusively from the Bank of Tanzania Monthly Economic Review, March 2026 (data period: February 2026), Section 3.0 — Economic Performance in Zanzibar. Primary tables: 3.1.1 (Inflation), Chart 3.1.1, Chart 3.2.1, Chart 3.2.2, Table 3.3.1 (Current Account), Table 3.3.2 (Exports), and Table 3.3.3 (Imports). Supplementary data sourced from the Office of the Chief Government Statistician (OCGS) Zanzibar and the Ministry of Finance and Planning, Zanzibar. TICGL analytical commentary represents independent research interpretation and does not constitute investment advice. Figures marked "p" are provisional.
Bank of Tanzania · March 2026 · Interest Rate Analysis
Tanzania's Lending & Deposit Interest Rates
A forensic breakdown of Tanzania's commercial bank rate structure — what borrowers pay, what savers earn, and what the spread between them tells investors about the cost of capital in Tanzania's evolving financial landscape.
Overall Lending Rate
15.11%
Feb 2026 | ▼ -0.03pp MoM
12-Month Deposit Rate
9.82%
Feb 2026 | ▲ +0.12pp MoM
Interest Rate Spread
5.59pp
Feb 2026 | ▼ Narrowing trend
Negotiated Lending Rate
12.19%
Feb 2026 | ▼ -0.06pp MoM
Central Bank Rate (CBR)
5.75%
Q1 2026 | Held steady
Overall Lending Rate
15.11%
▼ -0.03pp from Jan 2026
12-Month Deposit Rate
9.82%
▲ +0.12pp from Jan 2026
Short-Term Spread
5.59pp
▼ Narrowed from 5.79pp
Negotiated Lending Rate
12.19%
▼ -0.06pp from Jan 2026
Savings Deposit Rate
2.98%
▲ +0.04pp from Jan 2026
Rate Snapshot — February 2026
Tanzania's Complete Interest Rate Dashboard
In February 2026, commercial banks' interest rates remained broadly stable. The overall lending rate held near 15.11%, while deposit rates inched upward — compressing the interest spread to its narrowest level in recent months. Below is the full rate landscape as reported by the Bank of Tanzania.
💳
Overall Lending
15.11%
Feb 2026
Includes all loan maturities weighted by volume
⏱️
Short-Term Lending (≤1yr)
15.41%
▼ -0.08pp MoM
Up to 1-year loan facilities
🤝
Negotiated Lending
12.19%
▼ -0.06pp MoM
Prime/large corporate borrowers
🏦
Overall Time Deposit
8.32%
▼ -0.01pp MoM
All tenors weighted average
📅
12-Month Deposit
9.82%
▲ +0.12pp MoM
Annual fixed-term deposit rate
💰
Negotiated Deposit
11.48%
▼ -0.26pp MoM
Large depositor negotiated terms
🪙
Savings Deposit
2.98%
▲ +0.04pp MoM
Standard savings accounts
📐
Short-Term Spread
5.59pp
▼ Narrowing
1-yr lending minus deposit rate
Key Context: Tanzania's Central Bank Rate (CBR) was held at 5.75% for Q1 2026. The spread between the CBR and the overall lending rate of 15.11% — a gap of approximately 9.36 percentage points — represents banks' intermediation cost and margin. The gradual compression of this gap (the short-term spread narrowed from 6.29pp in Feb 2025 to 5.59pp in Feb 2026) reflects improved monetary policy transmission and strengthening competition in Tanzania's banking sector.
Lending Rate Analysis
Lending Rates: Cost of Borrowing in Tanzania
Tanzania's overall lending rate has trended gradually downward over the past year — from 15.14% in February 2025 to 15.11% in February 2026. While the decline is modest, the trend in negotiated rates (from 13.42% to 12.19%) signals meaningful credit cost improvement for qualifying borrowers.
Lending Rate Trends — February 2025 to February 2026
Source: Bank of Tanzania — Table A4: Interest Rates Structure (Feb 2025–Feb 2026)
Lending Rate by Tenor — February 2026
Short-term to over 5-year loan rates compared
BY MATURITY
Source: Table A4 — Bank of Tanzania, February 2026
Overall Lending Rate: Feb 2025 vs Feb 2026
Year-on-year change in each lending category
YoY CHANGE
Source: Table A4 — Bank of Tanzania Monthly Data
Lending Rate Spectrum — February 2026
All active lending rate categories ranked lowest to highest
RATE RANKING
Negotiated (Prime)
12.19%
12.19%
Long-Term (3–5yr)
13.95%
13.95%
Term Loans (>5yr)
14.20%
14.20%
Overall Lending
15.11%
15.11%
Short-Term (≤1yr)
15.41%
15.41%
Medium-Term (2–3yr)
15.27%
15.27%
Medium-Term (1–2yr)
16.70%
16.70%
Lending Rate Insight: The 1–2 year medium-term lending rate at 16.70% is the highest across all maturities — reflecting the higher risk pricing for bridge and working capital loans. In contrast, long-term loans (3–5 years) at 13.95% are cheaper, incentivising long-term investment financing. Investors should note that negotiated rates at 12.19% are available to prime borrowers — a full 296 basis points below the overall lending rate.
Deposit Rate Analysis
Deposit Rates: What Savers Earn in Tanzania
Tanzania's deposit rate landscape shows a wide range depending on tenure and negotiation power. From as low as 2.98% on savings accounts to 11.48% on negotiated deposits, the spread in deposit rates itself reflects significant opportunity for sophisticated depositors and institutional investors.
Deposit Rate Trends — February 2025 to February 2026
All deposit categories ranked — lowest to highest earning
DEPOSIT RANKING
Savings Account
2.98%
2.98%
1-Month Time Deposit
9.10%
9.10%
2-Month Time Deposit
9.16%
9.16%
3-Month Time Deposit
9.03%
9.03%
6-Month Time Deposit
10.26%
10.26%
12-Month Time Deposit
9.82%
9.82%
Negotiated Deposit
11.48%
11.48%
💡 Saver's Perspective: Real Returns Are Positive in Tanzania
With headline inflation at 3.2% in February 2026, Tanzania's deposit market offers genuinely positive real returns across most tenors. A 12-month time deposit at 9.82% delivers a real return of approximately +6.62% after inflation — among the most attractive in East Africa. Negotiated deposit rates at 11.48% yield a real return of +8.28%. This stands in stark contrast to many global markets where real deposit returns remain near zero or negative. For institutional investors and corporate treasury managers, Tanzania's deposit market presents a compelling case for TZS-denominated cash management.
Interest Rate Spread
The Lending–Deposit Spread: Narrowing But Still Wide
The interest rate spread — the difference between what banks charge borrowers and what they pay depositors — is a key measure of banking sector efficiency and financial inclusion. Tanzania's short-term spread narrowed from 6.29pp in February 2025 to 5.59pp in February 2026, a positive sign, but still elevated compared to mature markets.
Interest Rate Spread Trend — Feb 2025 to Feb 2026
Short-term lending vs 1-year deposit rate, and the spread between them (%)
SPREAD ANALYSIS
Source: Bank of Tanzania — Table A4 & Table 2.3.1 — Short-term interest rate spread
How the 15.11% Lending Rate Decomposes — February 2026
Interest Rates Across All Maturities — Feb 2025 to Feb 2026
The full rate structure across short, medium, and long-term tenors for both lending and deposits — essential data for loan pricing, investment modeling, and financial planning in Tanzania.
Complete Rate Structure — All Tenors (Feb 2026)
Lending rates (red shades) vs Deposit rates (teal shades) by maturity bucket
FULL STRUCTURE
Source: Bank of Tanzania — Table A4, February 2026 data
Negotiated Rate Deep Dive
Negotiated Rates: The Prime Borrower Advantage
Negotiated rates represent the terms available to the most creditworthy borrowers and largest depositors. Tracking the trajectory of negotiated rates reveals the directional bias of bank pricing policy — and the premium paid by smaller, less-connected borrowers.
Negotiated Lending Rate Trend
Monthly — Feb 2025 to Feb 2026 (%)
PRIME LENDING
Source: Table A4 — Bank of Tanzania | Jan 2025: 12.80% → Feb 2026: 12.19%
Negotiated Deposit Rate Trend
Monthly — Feb 2025 to Feb 2026 (%)
PRIME DEPOSIT
Source: Table A4 — Bank of Tanzania | Feb 2025: 11.40% → Feb 2026: 11.48%
📉 The Premium Borrower Gap: 296 Basis Points
The difference between the overall lending rate (15.11%) and the negotiated rate for prime borrowers (12.19%) is 296 basis points — representing the "creditworthiness premium" that smaller or riskier borrowers pay in Tanzania. This gap has been narrowing: in January 2025 it stood at 293bp (15.73% vs 12.80%), suggesting that credit risk differentiation is becoming slightly tighter. For TICGL-advised clients, securing negotiated lending terms can save significant financing costs on large-scale investments.
Complete Data Reference
Full Interest Rate Tables — Bank of Tanzania Data
All data sourced from Bank of Tanzania Table A4 (Interest Rates Structure). All values are percentages per annum.
Table 1: Commercial Bank Lending Interest Rates (% per annum)
Rate Category
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-25
Jan-26
Feb-26
YoY Change
Overall Lending Rate
15.14
15.50
15.16
15.18
15.23
15.16
15.07
15.18
15.19
15.27
15.24
15.10
15.11
▼ -0.03pp
Short-Term (≤1 year)
15.77
15.83
16.15
15.96
15.69
15.51
15.64
15.52
15.50
15.53
15.46
15.49
15.41
▼ -0.36pp
Medium-Term (1–2 years)
16.06
16.56
16.33
16.35
16.49
16.41
16.45
16.26
16.42
16.42
16.42
16.73
16.70
▲ +0.64pp
Medium-Term (2–3 years)
15.53
16.44
15.25
15.24
15.38
15.22
15.01
15.19
15.13
15.18
15.43
14.97
15.27
▼ -0.26pp
Long-Term (3–5 years)
14.09
14.32
13.88
14.19
14.35
14.39
14.02
14.26
14.24
14.43
14.29
14.05
13.95
▼ -0.14pp
Term Loans (>5 years)
14.25
14.36
14.19
14.17
14.25
14.28
14.22
14.66
14.68
14.79
14.61
14.24
14.20
▼ -0.05pp
Negotiated Lending Rate
13.42
12.94
12.88
12.99
12.68
12.56
12.72
12.84
12.40
12.61
12.38
12.25
12.19
▼ -1.23pp
Table 2: Commercial Bank Deposit Interest Rates (% per annum)
Note: Short-term spread = Short-term lending rate (≤1yr) minus 12-month deposit rate. CBR = Central Bank Rate set by Monetary Policy Committee. Source: Bank of Tanzania Table A4 & Table 2.3.1.
TICGL Strategic Analysis
What Tanzania's Interest Rate Structure Means for You
TICGL's interpretation of the rate landscape for borrowers, investors, depositors, and businesses operating in or entering Tanzania in 2026.
📉
Lending Rates: Gradually Becoming More Affordable
The overall lending rate fell from 15.14% in Feb 2025 to 15.11% in Feb 2026 — modest but part of a structural downtrend. More significantly, the negotiated rate dropped 123 basis points (from 13.42% to 12.19%), reflecting improved credit quality, lower Treasury bill yields, and enhanced monetary policy transmission. Businesses securing investment financing now can lock in historically competitive terms.
💹
Deposit Rates: Exceptional Real Returns vs. Global Peers
With a 12-month deposit rate of 9.82% and inflation at 3.2%, Tanzania offers a real deposit return of ~6.62% — exceptionally high by international standards. For regional treasury managers and institutional investors, TZS-denominated fixed deposits represent a high-yield, relatively low-risk instrument in the East African context.
📐
Spread Compression: A Structural Improvement Signal
The short-term interest rate spread narrowed from 6.29pp (Feb 2025) to 5.59pp (Feb 2026) — a 70 basis point improvement in banking efficiency. This trend is driven by falling Treasury bill rates (from 11.93% to 5.68%), which reduces banks' alternative investment returns and forces them to compete more aggressively on deposit and lending pricing.
🏢
Prime vs. Standard: The 296bp Access Premium
The gap between the overall lending rate (15.11%) and the negotiated rate (12.19%) is 296 basis points — the "financial access premium" paid by small and medium enterprises. Reducing this gap through credit information systems, collateral reform, and development finance is central to Tanzania's financial inclusion agenda and a key priority for TICGL advisory clients.
📊
T-Bill Rate Collapse: Implications for Asset Allocation
The dramatic fall in Treasury bill yields — from 11.93% (Feb 2025) to 5.68% (Feb 2026) — fundamentally changes bank asset allocation decisions. With government securities yielding less, banks have greater incentive to lend to the private sector, contributing to the 24.4% private sector credit growth recorded in February 2026. This is a powerful tailwind for business investment.
🌍
Regional Positioning: Attractive vs. East African Peers
At 15.11%, Tanzania's overall lending rate is competitive within the EAC region, where comparable economies show similar or higher rates. The key differentiator is Tanzania's combination of relatively low inflation (3.2%), stable exchange rate, and growing banking sector depth — making the real cost of capital increasingly attractive to long-term investors.
🎯 TICGL Rate Outlook: What to Watch in 2026
Three dynamics will shape Tanzania's interest rate environment through the remainder of 2026: (1) CBR direction — the MPC held at 5.75% for Q1 2026; any future cut would accelerate lending rate compression; (2) T-Bill yield floor — at 5.68%, Treasury bill rates are near the CBR floor, limiting further decline and setting a minimum for bank deposit pricing; (3) Private sector credit demand — with credit growing at 24.4%, rising loan demand could provide upward pressure on lending rates, counteracting monetary easing. Net effect: rates likely to remain broadly stable in 2026, with negotiated rates continuing their gradual downward trend.
TICGL's Business Intelligence Dashboard provides historical and current data on Tanzania's lending rates, deposit rates, Treasury bill yields, monetary policy rates, and more — all in one place for investors, analysts, and businesses.
Tanzania Domestic Debt 2026: Government Debt by Creditor Category | TICGL
TICGL Economic Intelligence · BoT MER March 2026
Tanzania's Domestic Debt: Who Holds the Government's Obligations?
A rigorous breakdown of Tanzania's TZS 38.78 trillion domestic debt stock as of February 2026 — analysing the creditor landscape: commercial banks, pension funds, the Bank of Tanzania, insurance firms, and the broader market. Sourced from Bank of Tanzania official data.
Tanzania's domestic government debt is held across five major creditor groups. Commercial banks and pension funds collectively account for over 54 percent of all domestic obligations, making them the principal financiers of the government's domestic borrowing programme. The Bank of Tanzania maintains a significant monetary financing role at 19.3 percent.
🏦
Commercial Banks
27.9%
TZS 10,834.3B
↓ from 28.8% (Feb-25) · Largest single holder
🏛️
Pension Funds
27.0%
TZS 10,463.9B
↑ from 26.7% (Feb-25) · Long-term investors
🏧
Bank of Tanzania
19.3%
TZS 7,468.4B
↓ from 20.1% (Feb-25) · Monetary authority
🛡️
Insurance Companies
5.1%
TZS 1,983.5B
↓ from 5.4% (Feb-25) · Regulatory holders
🏢
BOT Special Funds
2.0%
TZS 757.8B
↑ from 1.6% (Feb-25) · BoT managed funds
🌐
Others
18.8%
TZS 7,273.8B
Incl. public institutions, private companies, individuals, non-residents
Table 2.6.6 — Government Domestic Debt by Creditor Category
TZS Billions · Source: Ministry of Finance & Bank of Tanzania
Creditor
Feb-25 (TZS B)
Feb-25 Share
Jan-26 (TZS B)
Jan-26 Share
Feb-26 (TZS B)
Feb-26 Share
YoY Change (TZS B)
YoY Δ Share (pp)
🏦 Commercial Banks
9,791.4
28.8%
10,902.5
28.2%
10,834.3
27.9%
+1,042.9
−0.9pp
🏛️ Pension Funds
9,097.2
26.7%
10,389.5
26.9%
10,463.9
27.0%
+1,366.7
+0.3pp
🏧 Bank of Tanzania
6,847.5
20.1%
7,436.0
19.3%
7,468.4
19.3%
+620.9
−0.8pp
🛡️ Insurance Companies
1,852.3
5.4%
2,005.0
5.2%
1,983.5
5.1%
+131.2
−0.3pp
🏢 BOT Special Funds
552.7
1.6%
737.8
1.9%
757.8
2.0%
+205.1
+0.4pp
🌐 Others
5,872.8
17.3%
7,128.9
18.5%
7,273.8
18.8%
+1,401.0
+1.5pp
📋 TOTAL DOMESTIC DEBT
34,014.1
100%
38,599.6
100%
38,781.7
100%
+4,767.6
—
Source: Ministry of Finance and Bank of Tanzania · p = provisional · BOT = Bank of Tanzania · pp = percentage points
Domestic Debt by Borrowing Instruments
The instrument breakdown reveals a strong preference for long-term Treasury bonds, which now constitute over 80 percent of the domestic debt portfolio. This reflects the government's deliberate strategy to reduce rollover risk and extend the maturity profile of its domestic obligations — a favourable development for debt sustainability.
80.8%
📜 Treasury Bonds share (Feb-26)
4.3%
📄 Treasury Bills share
14.6%
🔄 Non-Securitised Debt (Overdraft)
TZS 182B
📉 Net change in T-Bills (MoM)
Instrument Share — February 2026
% of Total Domestic Debt
Treasury Bonds vs Treasury Bills — Value Trend
TZS Billions · Feb-25, Jan-26, Feb-26
Table 2.6.5 — Government Domestic Debt by Borrowing Instruments
TZS Billions · Source: Ministry of Finance & Bank of Tanzania
Instrument
Feb-25 (TZS B)
Feb-25 Share
Jan-26 (TZS B)
Jan-26 Share
Feb-26 (TZS B)
Feb-26 Share
YoY Change (TZS B)
📜Government Securities
29,108.2
85.6%
32,972.3
85.4%
33,122.0
85.4%
+4,013.8
Treasury Bills
1,847.4
5.4%
1,821.4
4.7%
1,653.0
4.3%
−194.4
Government Stocks
187.1
0.6%
135.7
0.4%
135.7
0.4%
−51.4
Government Bonds
27,073.7
79.6%
31,015.1
80.4%
31,333.2
80.8%
+4,259.5
Tax Certificates
0.1
0.0%
0.1
0.0%
0.1
0.0%
0.0
🔄Non-Securitised Debt
4,905.9
14.4%
5,627.3
14.6%
5,659.7
14.6%
+753.8
Overdraft (BoT)
4,887.5
14.4%
5,627.2
14.6%
5,659.6
14.6%
+772.1
Other Liabilities
18.4
0.1%
0.0
0.0%
0.0
0.0%
−18.4
📋 TOTAL (excl. liquidity papers)
34,014.1
100%
38,599.6
100%
38,781.7
100%
+4,767.6
Source: Ministry of Finance and Bank of Tanzania · p = provisional · Excludes liquidity papers
Domestic Debt Growth Trend
Tanzania's domestic debt has grown from TZS 13.74 trillion in February 2018 to TZS 38.78 trillion in February 2026 — a 182 percent increase over eight years. This section tracks the trajectory of the domestic debt stock and the evolution of creditor composition over time, with particular attention to the growing role of pension funds.
Government Domestic Debt Stock — Historical Trend (Feb-18 to Feb-26)
TZS Billions · Source: Chart 2.6.1, Bank of Tanzania MER March 2026
Creditor Holdings Over Time — Feb-25, Jan-26, Feb-26
TZS Billions · Stacked by Creditor Category
Government Securities Issued for Financing (Feb-25 → Feb-26)
TZS Billions · T-Bills + T-Bonds Monthly
Creditor Share Shift — Feb-25 vs Feb-26
Percentage Point Change (pp) Year-on-Year
Year-on-Year Growth by Creditor — Feb-25 to Feb-26
TZS Billions · Growth in holdings & share shift
Creditor
Feb-25 (TZS B)
Feb-26 (TZS B)
Absolute Change (TZS B)
Growth Rate (%)
Share Feb-25
Share Feb-26
Share Δ (pp)
Source: Table 2.6.6, Ministry of Finance and Bank of Tanzania · MER March 2026 · p = provisional
TICGL Analytical Commentary
TICGL's independent interpretation of Tanzania's February 2026 domestic debt creditor data — highlighting structural trends, investment implications, and policy risks.
💡 Five Key Observations from TICGL Research
1. Pension Funds Overtaking Commercial Banks as Dominant Creditors. The gap between commercial bank holdings (27.9%) and pension fund holdings (27.0%) has narrowed sharply over the review period. In February 2025, commercial banks held 28.8% versus pension funds' 26.7% — a gap of 2.1 percentage points. By February 2026, the gap has compressed to just 0.9 percentage points. At current trends, pension funds are positioned to become Tanzania's largest domestic creditor within 12–18 months. This structural shift has important implications for investment regulation, duration management, and the broader pension sector's exposure to sovereign risk.
2. BoT Overdraft Growth Demands Monitoring. The Bank of Tanzania's overdraft to the government stands at TZS 5,659.6 billion — a TZS 772.1 billion increase year-on-year. This form of quasi-monetary financing, while institutionally managed, can create inflationary pressure if sustained at elevated levels. The TZS 5.66 trillion overdraft now represents 14.6% of total domestic debt, unchanged from January 2026 but materially higher than historical averages. Investors should track this figure closely as a proxy for fiscal pressure on the central bank.
3. Treasury Bond Dominance Signals Improved Debt Structure. Government bonds now account for 80.8% of all domestic debt (up from 79.6% in Feb-25), reflecting the Treasury's continued preference for long-duration instruments. The near-elimination of short-term T-Bills in the financing mix (T-Bills fell from 5.4% to 4.3% of total debt year-on-year) reduces rollover risk and aligns the domestic debt profile with international best practices for debt sustainability.
4. "Others" Category Expanding — A Diversification Signal. The "Others" creditor group — comprising public institutions, private companies, individuals, and non-residents — grew its share from 17.3% (Feb-25) to 18.8% (Feb-26), adding TZS 1.4 trillion in holdings year-on-year. This is the fastest-growing creditor category in absolute terms, likely reflecting increased retail and non-resident participation in Tanzania's domestic bond market. TICGL views this as a positive diversification trend, reducing the government's reliance on captive institutional buyers.
5. Insurance Sector's Declining Share — A Regulatory Watch Point. Insurance companies' share declined from 5.4% to 5.1% year-on-year. While absolute holdings grew slightly (TZS 1,852B to TZS 1,984B), the relative decline suggests insurance firms may be rebalancing their portfolios away from government securities — potentially toward equities or real estate. Regulators and policymakers should monitor whether this trend reflects portfolio diversification (healthy) or liquidity stress (concerning) within the insurance sector.
Explore More TICGL Research
Deepen your understanding of Tanzania's economic landscape with these TICGL resources.
Disclaimer & Source Attribution: All data on this page is sourced from the Bank of Tanzania Monthly Economic Review, March 2026 (data period: February 2026). Primary tables: 2.6.5 (Domestic Debt by Instrument), 2.6.6 (Domestic Debt by Creditor Category), and Chart 2.6.1. TICGL analytical commentary represents the independent research interpretation of Tanzania Investment and Consultant Group Ltd and does not constitute investment advice. Figures are provisional where indicated. Refer to official Bank of Tanzania publications for authoritative data.
A deep-dive analysis of Tanzania's USD 35.9 billion external debt stock as of February 2026 — examining who owes it, where the funds are deployed, and what currency risk it carries.
Data Period: February 2026
Source: Bank of Tanzania MER
Published: April 2026
Dar es Salaam, Tanzania
Total External Debt Stock
$35.86B
▼ 0.1% MoM
Feb-26 provisional
Central Govt Share
82.4%
→ Stable
USD 29.56B disbursed
Private Sector Share
16.1%
▲ Slight uptick
USD 5.77B disbursed
USD Denomination
66.0%
→ Stable
Dominant currency
Monthly Disbursements
$83.8M
▼ vs $143.5M Jan
Mainly to central govt
Debt Service Payments
$98.9M
→ Feb-26
$35.4M principal
External Debt Stock by Borrower
Tanzania's external debt is overwhelmingly concentrated in the central government, which accounts for over 82 percent of the total disbursed outstanding debt. The private sector contributes the remaining 16 percent, while public corporations have exited their external obligations entirely.
🏛️
Central Government Dominance
At USD 29.56B (82.4%), central government external debt remains the cornerstone of Tanzania's external obligation, primarily funding infrastructure and development projects.
🏢
Private Sector Participation
Private sector external debt stands at USD 5.77B (16.1%). A modest increase from January 2026 signals growing private sector access to external capital markets.
⚠️
Interest Arrears
Interest arrears on central government debt stand at USD 80.2M, while private sector arrears total USD 444.5M — flagging pockets of debt service stress in the private sector.
Disbursed Outstanding Debt by Borrower
USD Millions · February 2026
Borrower Share Trend (Feb-25 → Feb-26)
Percentage of Total External Debt
Table 2.6.1 — External Debt Stock by Borrower
Millions of USD · Source: Ministry of Finance & Bank of Tanzania
Borrower Category
Feb-25 Amount
Feb-25 Share
Jan-26 Amount
Jan-26 Share
Feb-26 Amount
Feb-26 Share
Change (MoM)
Central Government
Disbursed Outstanding Debt
26,317.1
80.3%
29,606.9
82.5%
29,560.2
82.4%
▼ 46.7
Interest Arrears
77.3
0.2%
80.3
0.2%
80.2
0.2%
▼ 0.1
Central Govt Subtotal
26,394.4
80.5%
29,687.2
82.7%
29,640.4
82.7%
▼ 46.8
Private Sector
Disbursed Outstanding Debt
5,827.2
17.8%
5,770.3
16.1%
5,774.3
16.1%
▲ 4.0
Interest Arrears
562.8
1.7%
434.3
1.2%
444.5
1.2%
▲ 10.2
Private Sector Subtotal
6,389.9
19.5%
6,204.7
17.3%
6,218.7
17.3%
▲ 14.0
Public Corporations
Disbursed Outstanding Debt
3.8
0.0%
0.0
0.0%
0.0
0.0%
—
TOTAL EXTERNAL DEBT STOCK
32,788.0
100%
35,891.9
100%
35,859.1
100%
▼ 32.8
Source: Ministry of Finance and Bank of Tanzania · p = provisional data · DOD = Disbursed Outstanding Debt
Disbursed Outstanding Debt by Use of Funds
Understanding where external borrowings are channelled reveals Tanzania's development priorities and capital allocation choices. The sectoral breakdown shows continued emphasis on balance of payments support, transport infrastructure, and social services — collectively representing over 63 percent of all disbursed external debt.
🚗
Transport Leads in Infrastructure
Transport & Telecommunication holds the second-largest share at 21.9% (USD 7.74B), reflecting Tanzania's continued push to modernise its road, rail, and connectivity networks.
📚
Social Welfare at 19.3%
USD 6.83B committed to social welfare and education — signalling strong multilateral partnerships channelled toward human capital development and social protection programmes.
⚡
Energy Declines Slightly
Energy & Mining fell from 13.1% (Feb-25) to 12.0% (Feb-26), suggesting a moderation in energy sector borrowings or reclassification of some project financing.
Debt by Use of Funds — Feb-26
Percentage Share of Total Disbursed Outstanding Debt
Use of Funds Share: Feb-25 vs Feb-26
Comparative Percentage — Year-on-Year
Use of Funds — Visual Share Breakdown (February 2026)
Percentage of Total Disbursed Outstanding Debt · USD 35.33B Base
Source: Ministry of Finance and Bank of Tanzania · Table 2.6.3
Table 2.6.3 — Disbursed Outstanding Debt by Use of Funds
Percentage Share · Source: Ministry of Finance & Bank of Tanzania
Activity / Sector
Feb-25 (%)
Jan-26 (%)
Feb-26 (%)
YoY Change (pp)
Trend
BoP & Budget Support
20.9
22.6
22.5
▲ +1.6pp
⬆️
Transport & Telecommunication
21.2
21.8
21.9
▲ +0.7pp
⬆️
Social Welfare & Education
20.0
19.4
19.3
▼ −0.7pp
⬇️
Energy & Mining
13.1
12.0
12.0
▼ −1.1pp
⬇️
Real Estate & Construction
4.8
4.9
4.9
▲ +0.1pp
→
Finance & Insurance
4.5
3.5
3.5
▼ −1.0pp
⬇️
Agriculture
4.8
5.3
5.3
▲ +0.5pp
⬆️
Industries
3.6
3.7
3.7
▲ +0.1pp
→
Tourism
1.6
1.8
1.8
▲ +0.2pp
⬆️
Other
5.5
4.9
4.9
▼ −0.6pp
⬇️
TOTAL
100.0
100.0
100.0
—
—
Source: Ministry of Finance and Bank of Tanzania · p = provisional · BoP = Balance of Payments · pp = percentage points
Disbursed Outstanding Debt by Currency Composition
Currency composition of external debt is a critical determinant of exchange rate risk exposure. Tanzania's debt portfolio is heavily weighted toward the US dollar, creating vulnerability to shilling depreciation. The moderate presence of the Euro and Chinese Yuan adds diversification but also multiplies the channels through which currency movements can inflate debt servicing costs.
🇺🇸
US Dollar (USD)
66.0%
Stable · was 67.6% in Feb-25 ~USD 23.3B equivalent
🇪🇺
Euro (EUR)
17.7%
Rising · was 16.7% in Feb-25 ~USD 6.26B equivalent
🇨🇳
Chinese Yuan (CNY)
6.5%
Stable · was 6.3% in Feb-25 ~USD 2.31B equivalent
🌍
Other Currencies
9.8%
Stable · was 9.3% in Feb-25 ~USD 3.45B equivalent
Currency Composition — February 2026
Share of Total Disbursed Outstanding Debt
Currency Share Trend (Feb-25 → Feb-26)
Year-on-Year Shift in Currency Composition (%)
Table 2.6.4 — Disbursed Outstanding Debt by Currency Composition
Percentage Share · Source: Ministry of Finance & Bank of Tanzania
Currency
Feb-25 (%)
Jan-26 (%)
Feb-26 (%)
YoY Change (pp)
Estimated Value (USD B, Feb-26)
Risk Profile
🇺🇸 United States Dollar
67.6
65.9
66.0
▼ −1.6pp
~23.3
⚠ High FX Risk
🇪🇺 Euro
16.7
17.7
17.7
▲ +1.0pp
~6.3
⚠ Moderate Risk
🇨🇳 Chinese Yuan
6.3
6.5
6.5
▲ +0.2pp
~2.3
✓ Managed
🌍 Other Currencies
9.3
9.8
9.8
▲ +0.5pp
~3.5
ℹ Diversified
TOTAL
100.0
100.0
100.0
—
~35.3
—
Source: Ministry of Finance and Bank of Tanzania · r = revised · p = provisional · pp = percentage points · Estimated values based on total disbursed outstanding debt of USD 35.33B
External Debt Monthly Trend
Tracking the evolution of Tanzania's external debt stock over the 13-month period from February 2025 to February 2026 reveals a broadly rising trajectory — punctuated by large disbursement events linked to project financing — and a modest contraction in the most recent period.
Total External Debt Stock — Monthly Trend (Feb-25 to Feb-26)
USD Millions · Disbursed Outstanding Debt (DOD)
Monthly Disbursements
USD Millions
Debt Service: Principal & Interest
USD Millions
Monthly External Debt Summary — Feb-25 to Feb-26
Millions of USD · Source: Table A10, Bank of Tanzania MER March 2026
Period
Total DOD
Central Govt
Private Sector
Disbursements
Debt Service
Net Flows
Source: Table A10, Bank of Tanzania Monthly Economic Review, March 2026 · DOD = Disbursed Outstanding Debt
TICGL Analytical Commentary
Drawing on the Bank of Tanzania's official data, TICGL provides the following investment and policy-relevant interpretations of Tanzania's February 2026 external debt position.
1. USD Concentration Remains the Primary Vulnerability. With 66 percent of external debt denominated in US dollars, Tanzania's debt servicing costs are acutely sensitive to TZS/USD exchange rate movements. The shilling depreciated by approximately 3.14 percent year-on-year in February 2026, adding pressure to debt repayment in local currency terms. Investors and policymakers should monitor the Federal Reserve's rate trajectory, as any sustained USD strengthening would mechanically increase Tanzania's external debt burden in shilling terms.
2. Rising Euro Share Adds EUR Risk Exposure. The Euro's share has risen from 16.7% (Feb-25) to 17.7% (Feb-26), reflecting new disbursements likely tied to EU-funded development projects. While the EUR provides some natural diversification from the USD, ECB policy cycles can diverge from Tanzania's domestic monetary conditions, creating basis risk in debt servicing. TICGL recommends that the government maintain hedging contingency plans and track EUR/TZS movements in budgetary frameworks.
3. BOP Support Dominance Signals Structural Financing Gaps. With 22.5% of all disbursed debt allocated to BoP and budget support, Tanzania continues to rely on external borrowing to bridge fiscal shortfalls — a pattern that warrants attention as interest obligations grow. Investors should note that this category of borrowing, while stabilising in the short term, contributes limited productive capacity growth. A gradual reorientation toward project-tied financing in productive sectors (energy, manufacturing, agriculture) would improve the debt-to-GDP growth ratio.
4. Private Sector Arrears Deserve Close Monitoring. Private sector interest arrears of USD 444.5 million represent a 21% increase from USD 562.8 million in February 2025 — trending downward, which is positive — but at 7.7% of total private sector external debt, they indicate pockets of financial distress. Enhanced credit risk frameworks and Bank of Tanzania oversight of private sector external borrowings are advised to prevent systemic spillovers.
5. Chinese Yuan Exposure Is Modest but Strategic. CNY-denominated debt at 6.5% (~USD 2.3B) is largely linked to Chinese bilateral and commercial loans for infrastructure. While modest in share, this exposure is significant in the context of Tanzania-China bilateral economic relations. Project implementation timelines and associated drawdown schedules for SGRC and SGR-linked financing should be tracked through PPPC and MoF channels.
External Debt Key Ratios — Historical Perspective
Tanzania External Debt Stock 2018–2026 · Millions of USD
Source: Table A1 — Selected Economic Indicators, Bank of Tanzania · 2025p = provisional
Related TICGL Resources
Explore more economic intelligence, dashboards, and research reports from the TICGL platform.
Disclaimer & Source Attribution: All data presented on this page is sourced directly from the Bank of Tanzania Monthly Economic Review, March 2026 (data period: February 2026). Tables referenced include Table 2.6.1, 2.6.3, 2.6.4, and Table A10. TICGL analytical commentary represents the independent interpretation of the Tanzania Investment and Consultant Group Ltd and does not constitute financial advice. Figures marked "p" are provisional. Users should refer to the official Bank of Tanzania publication for authoritative data.
Tanzania Government Budgetary Operations 2026 | Central Revenue & Expenditure | TICGL
Bank of Tanzania · March 2026 · Fiscal Analysis
Tanzania Central Government Revenue & Expenditure
"A forensic breakdown of Tanzania's budgetary operations — how much the government collected, what it spent, and what the numbers reveal about fiscal health and investment climate in 2026."
📅 Reporting Period: January 2026💰 Total Revenue: TZS 3,340.2 Bn🏛️ Total Expenditure: TZS 3,751.7 Bn📊 Source: Bank of Tanzania
Total Revenue (Jan 2026)
3,340.2
Bn TZS ▲ +5.4% vs target
Tax Revenue (Jan 2026)
2,762.3
Bn TZS ▲ +7.1% vs target
Total Expenditure (Jan 2026)
3,751.7
Bn TZS — Recurrent + Dev
Development Expenditure
1,061.8
Bn TZS (28.3% of total)
Non-Tax Revenue
394.1
Bn TZS — 87.9% of target
Central Government Revenue
How Much Did Tanzania Collect in January 2026?
Domestic revenue collections in January 2026 remained robust at TZS 3,340.2 billion — surpassing the monthly target by 5.4%. Central Government revenue alone reached TZS 3,156.4 billion, reflecting strengthened tax administration and improved taxpayer compliance across all major categories.
Headline Result: Total domestic revenue of TZS 3,340.2 billion exceeded the January 2026 target by 5.4%. Central Government revenue of TZS 3,156.4 billion was driven primarily by tax revenue at TZS 2,762.3 billion — beating its target by 7.1%. Only non-tax revenue fell short, reaching 87.9% of its target at TZS 394.1 billion.
Central Government Revenue: Actuals vs Estimates vs Prior Year (January)
Billions of TZS — All revenue categories side-by-side
REVENUE COMPARISON
Source: Ministry of Finance, Bank of Tanzania — Table A2 & Chart 2.5.1
Revenue Performance vs Monthly Target — January 2026
Actual collected as % of the monthly target for each category
Source: Ministry of Finance, Bank of Tanzania — January 2026 Budget Operations. Note: Full-year budget non-tax target is TZS 4,681.7 Bn; single-month target shown here is proportional estimate.
Revenue Composition — January 2026
Share of each revenue category in total collections
COMPOSITION
Source: Bank of Tanzania — Table A2 Computations
Revenue Growth Trend — Jul 2025 to Jan 2026 (Cumulative)
Monthly cumulative actual vs estimate (Bn TZS)
YTD TREND
Source: Ministry of Finance — Table A2 (July–January 2026 YTD)
Tanzania's tax performance in January 2026 demonstrates the effectiveness of ongoing TRA reforms and digital tax administration systems. Three of four tax categories exceeded their monthly targets, led by a strong surge in income tax collections.
Tax Revenue by Category — 3-Year January Comparison
Jan 2025 Actual vs Jan 2026 Estimate vs Jan 2026 Actual (Bn TZS)
3-YEAR VIEW
Source: Ministry of Finance — Chart 2.5.1 data
Tax Revenue YoY Growth by Category
% change between January 2025 actual and January 2026 actual
YoY GROWTH
Source: Ministry of Finance — Bank of Tanzania Computations
Income tax collections grew robustly year-on-year, outpacing the target by 13.9% — reflecting broad-based expansion in formal sector employment, buoyant private sector credit (up 24.4%), and the Bank's specialized credit facilities for SMEs that are widening the taxable base. Import duties at +9.8% above target signal sustained trade momentum and rising import values, particularly in capital goods and industrial supplies. These trends suggest tax buoyancy above 1.0 — meaning tax revenue is growing faster than the economy, a positive signal for fiscal sustainability.
Non-Tax Revenue: TZS 394.1 Billion — Below Target at 87.9%
Non-tax revenue in January 2026 reached TZS 394.1 billion — falling short of the monthly target by 12.1%. This performance reflects timing differences in fee collection and payments from state-owned enterprises, though it remains substantially higher than the TZS 347.8 billion collected in January 2025.
Context: Non-tax revenue shortfalls are common in Tanzania's January period, partly due to the timing of dividends, license renewals, and government service fees. Despite the miss against the monthly target, year-on-year non-tax revenue for January grew by 13.3% compared to TZS 347.8 billion in January 2025, indicating underlying structural improvement.
Non-Tax Revenue vs Tax Revenue Share
Proportional contribution to total Central Government revenue (Jan 2026)
REVENUE MIX
Source: Ministry of Finance — Table A2 January 2026 data
Non-Tax Revenue: Actual vs Target vs Prior Year
January period comparison (Bn TZS)
NON-TAX TREND
Source: Ministry of Finance — Table A2 & Chart 2.5.1
Government Expenditure
Total Expenditure: TZS 3,751.7 Billion in January 2026
The Government continued to align spending with available resources. Total expenditure of TZS 3,751.7 billion was split between recurrent commitments (TZS 2,689.9 billion, 71.7%) and development investment (TZS 1,061.8 billion, 28.3%), maintaining a consistent focus on infrastructure and capital formation.
Expenditure Balance: The revenue-expenditure gap in January 2026 was TZS 411.5 billion (before grants), financed through a mix of domestic and foreign borrowing. After grants of TZS 3,548 million, the overall balance stood at TZS -107.2 billion, financed primarily through domestic securities issuance and foreign project loans.
Central Government Expenditure: Actuals vs Estimates vs Prior Year (January)
Billions of TZS — Wages, Interest, Other Recurrent & Development
EXPENDITURE BREAKDOWN
Source: Ministry of Finance, Bank of Tanzania — Chart 2.5.2 & Table A2 (Provisional 2026 figures)
Expenditure Composition — January 2026
% share of total TZS 3,751.7 Bn spent
COMPOSITION
Source: Ministry of Finance — Table A2 January 2026
Recurrent vs Development Expenditure Trend
Monthly actual split — July 2025 to January 2026 (Bn TZS)
TREND
Source: Ministry of Finance — Table A2 Monthly breakdown
Development vs Recurrent Split
What Is Tanzania's Government Spending Money On?
Understanding the composition of government spending is crucial for investors. A higher development expenditure ratio signals infrastructure expansion, while the recurrent structure reveals fiscal rigidity and the cost of running government operations.
Expenditure Waterfall — January 2026 vs January 2025 vs Budget Estimate
All four expenditure lines stacked for comparative view (Bn TZS)
WATERFALL COMPARISON
Source: Ministry of Finance, Bank of Tanzania — Table A2
🔍 Recurrent Expenditure: What Makes Up TZS 2,689.9 Billion?
Of total recurrent spending, wages & salaries accounted for TZS 1,097.5 billion (40.8%), interest payments for TZS 492.6 billion (18.3%), and other goods, services, and transfers TZS 1,099.9 billion (40.9%). Interest payments of TZS 492.6 billion (down from an estimate of TZS 548.2 billion) reflect better-than-projected debt servicing conditions — partly supported by declining Treasury bill yields, which fell from 11.93% in February 2025 to 5.68% in February 2026.
Development Expenditure: Local Funding vs Foreign Funding (Jul–Jan 2026)
How development projects are financed — domestic vs external resources (Bn TZS)
DEV FINANCING
Source: Ministry of Finance — Table A2 (Local dev: TZS 801.0 Bn; Foreign dev: TZS 260.7 Bn in Jan 2026)
Year-to-Date Performance
7-Month Fiscal Year Progress: July 2025 – January 2026
Cumulative performance against the full-year FY 2025/26 budget provides a clearer picture of fiscal trajectory and whether Tanzania is on track to meet its annual revenue and expenditure targets.
Cumulative Revenue vs Expenditure vs Budget (Jul 2025 – Jan 2026)
Actuals vs 7-month pro-rated estimates vs full-year budget (Bn TZS)
YTD OVERVIEW
Source: Ministry of Finance — Table A2 (YTD: July–January 2026)
✅
Revenue: TZS 24,596.3 Bn Collected (7 Months)
Cumulative actual revenue of TZS 24,596.3 billion exceeded the 7-month estimate of TZS 23,806.5 billion — an outperformance of 3.3%. This is 60.8% of the full-year budget target of TZS 40,466.1 billion, broadly on track for a fiscal year with 7 of 12 months complete (58.3%).
⚠️
Expenditure: TZS 27,511.4 Bn Spent (7 Months)
Cumulative actual expenditure of TZS 27,511.4 billion was below the 7-month estimate of TZS 29,051.0 billion — an underspend of 5.3%. This may reflect project implementation delays in development expenditure, which has been a recurring pattern in Tanzania's fiscal execution.
📉
Development Spending: TZS 9,557.9 Bn (7 Months)
Development expenditure of TZS 9,557.9 billion was 86.5% of the 7-month estimate of TZS 11,052.9 billion. This underspend is partly due to slower disbursement of foreign project loans (TZS 1,906.9 Bn actual vs TZS 2,974.8 Bn estimate), which warrants monitoring for project delivery timelines.
🏦
Financing: Domestic vs Foreign Mix
Net foreign financing of TZS 1,697.3 billion was below the estimate of TZS 2,014.8 billion, while net domestic financing of TZS 1,845.1 billion was below the TZS 2,636.3 billion estimate — indicating lower-than-planned borrowing overall, a positive signal for debt sustainability.
Data Tables
Complete Budget Data — Full Reference Tables
All figures sourced directly from the Bank of Tanzania March 2026 Monthly Economic Review, Table A2 (Central Government Operations). All values in Billions of TZS unless stated.
Table 1: Central Government Revenue — January 2026 (Billions of TZS)
Revenue Category
FY 2025/26 Annual Budget
Jul–Jan 2026 Estimate
Jul–Jan 2026 Actual
Jan 2026 Estimate
Jan 2026 Actual
Jan 2025 Actual
YoY Change
vs Target
Total Revenue (incl. LGAs)
40,466.1
23,806.5
24,596.3
3,624.1
3,340.2
—
—
+5.4% ▲
Central Govt Revenue
36,857.7
22,821.2
23,638.5
3,488.7
3,156.4
—
—
—
Total Tax Revenue
32,176.0
18,518.2
20,302.6
2,578.9
2,762.3
—
+9.9% ▲
+7.1% ▲
Taxes on Imports
11,563.0
6,884.7
7,171.7
977.2
1,073.0
839.4
+27.8% ▲
+9.8% ▲
Income Tax
11,367.9
6,378.7
8,004.0
747.1
850.8
677.7
+25.5% ▲
+13.9% ▲
VAT & Excise (Local Goods)
7,016.5
3,866.0
3,774.1
661.4
622.6
553.0
+12.6% ▲
-5.9% ▼
Other Taxes
4,887.7
1,388.9
1,352.7
193.3
216.0
152.3
+41.8% ▲
+11.7% ▲
Non-Tax Revenue
4,681.7
4,303.0
3,335.9
909.7
394.1
347.8
+13.3% ▲
-56.7% ▼
LGA Own Sources
1,680.5
985.3
957.8
135.4
183.8
—
—
+35.7% ▲
Grants
1,069.9
577.2
511.1
86.8
3.5
—
—
-96.0% ▼
Table 2: Central Government Expenditure — January 2026 (Billions of TZS)
Expenditure Category
FY 2025/26 Annual Budget
Jul–Jan 2026 Estimate
Jul–Jan 2026 Actual
Jan 2026 Estimate
Jan 2026 Actual
Jan 2025 Actual
YoY Change
Total Expenditure
48,775.0
29,051.0
27,511.4
4,146.0
3,751.7
—
—
Recurrent Expenditure
31,281.3
17,998.1
17,953.5
2,694.8
2,689.9
—
71.7% of total
Wages & Salaries
10,917.5
7,581.7
7,590.5
1,101.4
1,097.5
942.5
+16.4% ▲
Interest Payments (Total)
6,493.7
3,655.7
3,174.9
548.2
492.6
375.1
+31.3% ▲
of which: Domestic
3,697.3
2,153.3
2,149.7
373.8
386.0
—
—
of which: Foreign
2,796.4
1,502.5
1,025.2
174.4
106.6
—
—
Other Goods, Services & Transfers
7,088.6
6,760.7
7,188.1
1,045.1
1,099.9
1,040.4
+5.7% ▲
Development Expenditure
17,493.7
11,052.9
9,557.9
1,451.2
1,061.7
1,218.1
-12.8% ▼
Local Development
12,117.8
8,078.1
7,651.0
934.2
801.0
—
—
Foreign-Funded Development
5,375.9
2,974.8
1,906.9
517.1
260.7
—
—
Table 3: Fiscal Balance & Financing — January 2026 (Billions of TZS)
Item
FY Budget
Jul–Jan Estimate
Jul–Jan Actual
Jan Estimate
Jan Actual
Balance Before Grants
-8,308.9
-5,244.5
-2,915.0
-522.0
-411.5
Grants
1,069.9
577.2
511.1
86.8
3.5
Overall Balance (After Grants)
-7,239.0
-4,651.1
-3,542.5
-435.2
-107.2
Foreign Financing (Net)
4,286.3
2,014.8
1,697.3
101.3
18.0
Loan Drawdowns
5,966.4
4,327.9
3,496.8
440.3
257.2
Amortization (Repayments)
-4,389.7
-2,341.4
-1,819.7
-339.0
-239.1
Domestic Financing (Net)
2,952.6
2,636.3
1,845.1
333.8
89.1
Bank Borrowing
2,466.1
2,201.9
239.0
278.8
73.9
Non-Bank (Net of Amortization)
486.5
434.4
1,606.2
55.0
15.3
Note: Positive financing = government borrowing; negative = repayments/deposit build-up. Source: Bank of Tanzania — Table A2 (Ministry of Finance data). Actual 2026 figures are provisional.
TICGL Strategic Analysis
What Do These Budget Numbers Mean for Tanzania?
TICGL's assessment of Tanzania's fiscal position and its implications for investors, businesses, and development partners operating in Tanzania.
🇹🇿 TICGL Overall Fiscal Assessment — January 2026
Tanzania's fiscal performance in January 2026 reveals a government that is collecting more than expected (revenue +5.4% vs target) while spending less than budgeted (expenditure -9.2% vs estimate). This combination narrows the budget deficit and reduces domestic borrowing pressure — which in turn helps keep Treasury bill yields down (5.68% in Feb 2026 vs 11.93% in Feb 2025) and lowers the cost of private sector credit. For investors, this fiscal prudence is a strong signal of macroeconomic stability and government capacity to maintain development spending without crowding out private investment.
📈
Strong Tax Buoyancy: Positive for Growth Signal
Tax revenue growing 9.9% above the January estimate — and income tax up 25.5% year-on-year — signals a broadening formal economy. This tax buoyancy (taxes growing faster than GDP) creates fiscal space for government investment without raising rates.
🏗️
Development Spending Undershoot: A Flag for Project Delivery
Development expenditure of TZS 1,061.7 billion was 26.9% below the January estimate of TZS 1,451.2 billion. This is partly due to delayed foreign loan disbursements (only TZS 260.7 Bn vs TZS 517.1 Bn estimated). Infrastructure investors should monitor project disbursement rates as a leading indicator of contract award timelines.
💡
Interest Cost Compression: A Fiscal Dividend
Interest payments of TZS 492.6 billion were TZS 55.6 billion below the January estimate, reflecting declining Treasury bill yields. As T-bill rates fall (from 11.9% to 5.7%), the government saves on debt service — creating more fiscal space for productive spending. This is partly the dividend of Tanzania's low and stable inflation.
🔴
Non-Tax Revenue: A Structural Vulnerability
Non-tax revenue of TZS 394.1 billion was 56.7% below the monthly estimate, continuing a pattern of non-tax underperformance. With the full-year target at TZS 4,681.7 billion, only TZS 3,335.9 billion has been collected in 7 months — 71.3% of what was needed by this point. Diversifying non-tax revenue sources is a key fiscal reform priority.
TICGL's Business Intelligence Dashboard provides real-time and historical data on Tanzania's government budget, tax revenue, expenditure trends, and more — helping investors, researchers, and policymakers make evidence-based decisions.
Tanzania Shilling Stability vs Inflation Rate 2026 | TICGL Economic Analysis
Bank of Tanzania · March 2026 Monthly Economic Review
Tanzania Shilling Stability vs. Inflation Rate
An in-depth TICGL analysis of the relationship between TZS exchange rate movements and domestic inflation, drawn from the Bank of Tanzania's official March 2026 data.
Data Period: Feb 2025 – Feb 2026
Published: April 2026
Dar es Salaam, Tanzania
TZS/USD (Feb 2026)
2,570
▲ 3.14% annual depreciation
Headline Inflation
3.2%
━ Unchanged YoY (Feb 2025)
Core Inflation
2.1%
▼ Down from 2.2% (Feb 2025)
Central Bank Rate
5.75%
━ Held Q1 2026
Executive Overview
How Stable Is the Tanzanian Shilling Against Inflation?
Tanzania's macroeconomic landscape in early 2026 presents a nuanced picture: the Tanzanian shilling has depreciated modestly against the US dollar, yet domestic inflation has remained remarkably contained — well within national and regional benchmarks. This analysis unpacks the relationship between currency movements and price stability.
Key Finding: The Tanzanian shilling averaged TZS 2,570.24 per USD in February 2026, representing a moderate annual depreciation of 3.14% compared to TZS 2,492.05 in February 2025. Despite this, headline inflation held steady at 3.2% — well within the national target band and both SADC and EAC regional convergence benchmarks.
💱
Controlled Currency Slide
The shilling's 3.14% annual depreciation is described by the Bank of Tanzania as "gradual," supported by active liquidity management and Bank participation in the Interbank Foreign Exchange Market (IFEM). The Bank made a net sale of USD 128.8 million in February 2026 to maintain orderly market conditions.
📊
Inflation Decoupled from FX
Despite currency softness, inflation remained anchored. Core inflation eased to 2.1%, energy inflation fell sharply to 2.8% from 5.2%, and food inflation held at 5.7%. This decoupling suggests effective monetary policy transmission and sufficient domestic supply buffers.
🏦
CBR Held at 5.75%
The Monetary Policy Committee held the Central Bank Rate at 5.75% for Q1 2026, signaling confidence in the inflation trajectory. The 7-day IBCM rate remained closely aligned with the CBR, demonstrating effective transmission of the monetary policy stance.
⛽
Oil Prices: A Key Buffer
Retail pump prices for petrol, diesel, and kerosene trended downward in Feb 2026, mirroring softer global white petroleum product prices. This was a key factor preventing currency depreciation from feeding through to domestic energy costs.
Exchange Rate Trend
TZS/USD Exchange Rate Movement (2018–2026)
The Tanzanian shilling has followed a controlled depreciation path over the long term, with the Bank of Tanzania actively managing volatility through IFEM interventions. Annual average rates show a steady but measured weakening trend.
Annual Average TZS per USD Exchange Rate
2018–2026 (Feb 2026 monthly average)
ANNUAL TREND
Source: Bank of Tanzania, Selected Economic Indicators (Table A1) & IFEM data (Feb 2026)
Monthly TZS/USD Average (Feb 2025 – Feb 2026)
Weighted average exchange rate from IFEM
MONTHLY
Source: Bank of Tanzania IFEM data, Chart 2.4.3
IFEM Transaction Volume vs Exchange Rate
USD millions traded vs TZS/USD rate
MARKET DEPTH
Source: Bank of Tanzania — IFEM monthly data
"The gradual nature of the exchange rate adjustment, supported by active liquidity management, continues to maintain the shilling's competitiveness while anchoring expectations against the backdrop of rising global oil prices and external logistical pressures."
— Bank of Tanzania, Monthly Economic Review, March 2026
Inflation Analysis
Tanzania Inflation Breakdown — February 2026
Headline inflation stood at 3.2% in February 2026 — unchanged year-on-year — reflecting a balance of easing core and energy pressures offset by seasonal food price dynamics.
Headline Inflation Components (Feb 2026)
Annual % change by CPI category
CPI BREAKDOWN
Source: National Bureau of Statistics, Bank of Tanzania — Table 2.1.1
Core vs Food vs Energy Inflation Trends
12-month % change, Feb 2024 – Feb 2026
TIME SERIES
Source: NBS, Bank of Tanzania — Tables A9(i) & A9(ii)
Inflation Contribution to Headline Rate — February 2026
Each component's contribution in percentage points to overall 3.2%
CONTRIBUTION ANALYSIS
Core Inflation1.6 pp
Unprocessed Food1.4 pp
Energy, Fuel & Utilities0.2 pp
Total: 3.2% | Source: Bank of Tanzania Chart 2.1.2 Computations
Combined Analysis
Shilling Depreciation vs. Inflation: Side-by-Side Trend
The most critical question for investors and businesses: does currency weakness fuel inflation? Tanzania's data through February 2026 tells a story of managed divergence — the shilling has softened, but inflation has not followed suit.
TZS/USD Rate vs Headline & Core Inflation (Dual Axis)
Monthly — Feb 2025 to Feb 2026 | Left: TZS per USD | Right: Inflation %
DUAL-AXIS COMPARISON
Source: Bank of Tanzania IFEM data; NBS CPI data — compiled by TICGL
🔍 TICGL Key Insight: The Transmission Gap
In most economies, a depreciating currency raises import costs, which then push up domestic prices. In Tanzania's case, the 3.14% annual TZS depreciation has not translated proportionally into inflation — largely because: (1) oil import costs actually declined 16.6% in the year to Feb 2026 due to softer global prices; (2) food supply reserves remain adequate with NFRA holding 560,008 tonnes; and (3) the Bank's monetary policy has kept credit costs stable. This transmission gap is a positive signal for business planning in Tanzania.
Monetary Policy Context
Bank of Tanzania's Policy Response
The Central Bank Rate, interbank market rates, and reserve management all play critical roles in the shilling-inflation relationship. Here's what the data shows about policy effectiveness.
Source: Bank of Tanzania Table A4 — Interest Rates Structure
Money Supply Growth (M3) vs Inflation
Annual % growth — M3 money and headline inflation
MONEY & PRICES
Source: Bank of Tanzania — Table 2.2.1 & Table A1
Monetary Paradox: Extended broad money (M3) grew at 24.5% year-on-year in February 2026, and private sector credit expanded 24.4% — yet inflation remained at just 3.2%. This apparent paradox is explained by strong productive sector absorption of credit (particularly mining at +103.9%, trade at +48.7%) and Tanzania's growing economic capacity, which has allowed money supply expansion without proportionate inflationary pressure.
Data Tables
Historical Data: Exchange Rate & Inflation
Comprehensive tabular data for analysis, benchmarking, and investment planning. All figures sourced directly from the Bank of Tanzania March 2026 Monthly Economic Review.
Table 1: Monthly Exchange Rate vs Inflation (Feb 2025 – Feb 2026)
Period
TZS/USD (Avg)
YoY FX Change
Headline Inflation %
Core Inflation %
Food Inflation %
Energy Inflation %
FX vs Inflation Spread
Feb 2025
2,492.05
Baseline
3.2%
2.5%
5.0%
5.4%
—
Mar 2025
~2,500
Depreciating
3.3%
2.2%
5.4%
7.9%
+0.1pp
Jun 2025
~2,530
Depreciating
3.3%
1.9%
7.3%
2.1%
+0.1pp
Sep 2025
~2,550
Depreciating
3.4%
2.2%
7.0%
3.7%
+0.2pp
Dec 2025
~2,560
Depreciating
3.6%
2.3%
6.7%
3.8%
+0.4pp
Jan 2026
~2,565
Depreciating
3.3%
2.2%
5.7%
5.2%
+0.1pp
Feb 2026
2,570.24
+3.14% YoY
3.2%
2.1%
5.7%
2.8%
Stable
Table 2: Annual Economic Indicators — Tanzania (2018–2025)
Year
TZS/USD (Annual Avg)
TZS/USD (End Period)
Headline Inflation %
M3 Growth %
Private Credit Growth %
GDP Growth (Const.) %
2018
2,263.8
2,281.2
3.5%
4.5%
4.9%
7.0%
2019
2,288.2
2,287.9
3.4%
9.6%
11.1%
6.9%
2020
2,294.1
2,298.5
3.3%
5.7%
3.1%
4.5%
2021
2,297.8
2,297.6
3.7%
15.5%
10.0%
4.8%
2022
2,303.1
2,308.9
4.3%
11.6%
22.5%
4.7%
2023
2,382.1
2,501.4
3.8%
14.1%
17.3%
5.1%
2024
2,597.4
2,374.7
3.1%
11.1%
12.4%
5.5%
2025
2,537.6
2,450.2
3.3%
24.7%
23.6%
6.0%
Table 3: Regional Inflation Benchmarking — Feb 2026
Country / Region
Inflation (Feb 2026)
vs Jan 2026
Key Driver
Target Compliance
Tanzania 🇹🇿
3.2%
↓ from 3.3%
Easing core & energy
✓ Compliant
Kenya 🇰🇪
4.3%
Decreasing
Transport, utilities easing
✓ Compliant
Uganda 🇺🇬
2.9%
Decreasing
Broad easing
✓ Compliant
Rwanda 🇷🇼
7.9%
Decreasing
Services pressure
⚠ Elevated
Burundi 🇧🇮
11.4%
Decreasing
Structural pressures
⚠ Elevated
EAC Average
5.9%
↓ from 6.2%
Regional easing
Regional Avg
South Africa 🇿🇦
3.0%
Stable
Fuel disinflation
✓ Compliant
SADC Average
5.9%
↓ from 6.7%
Fuel & transport disinflation
Regional Avg
TICGL Strategic Analysis
What Does This Mean for Investors & Businesses?
TICGL's interpretation of the shilling-inflation dynamics for those considering investment, operations, or consulting in Tanzania.
✅
Positive: Stable Real Returns Environment
With inflation at 3.2% and a 12-month deposit rate of 9.82%, real returns on TZS-denominated instruments remain positive. The interest rate spread supports domestic investment attraction and discourages capital flight despite currency softness.
📈
Positive: Export Sector Competitiveness
A weaker shilling makes Tanzania's exports more price-competitive internationally. Gold exports rose 35.8% to USD 4,968.4 million, while tourism receipts grew 8.8% to USD 7,520.3 million — both benefiting from favorable exchange dynamics.
⚠️
Watch: Import Cost Creep
Total imports rose to USD 18,634.2 million (year to Feb 2026). While oil import costs fell due to global price softening, industrial supply and capital goods imports are rising. If global energy prices rebound, import-driven inflation could accelerate.
🔴
Risk: Secondary Income Decline
Personal transfers (remittances) fell sharply, contributing to a 50% decline in secondary income to USD 265.8 million. This is a structural vulnerability: reduced remittances can pressure the shilling and limit household purchasing power in coming months.
🏗️
Opportunity: Credit-Driven Growth
Private sector credit grew 24.4% — with mining, trade, and agriculture leading sectoral expansion. The Bank's specialized financing facilities for agriculture and MSMEs suggest a deliberate strategy of channelling credit to productive, inflation-neutral activities.
🌍
Regional Advantage
At 3.2%, Tanzania's inflation is below the EAC regional average (5.9%) and SADC average (5.9%), and close to South Africa (3.0%). This relative price stability makes Tanzania among the most predictable operating environments in East and Southern Africa.
TICGL Research Network
Related TICGL Resources
Deepen your understanding of Tanzania's economy with these TICGL publications, tools, and programs.
TICGL's Business Intelligence Dashboard provides real-time and historical data on Tanzania's economy — exchange rates, inflation, trade flows, and more. Whether you're an investor, researcher, or policy analyst, our tools help you make evidence-based decisions.
Tanzania Shilling Stability vs National Debt 2026 | Bank of Tanzania Monthly Review | TICGL
Bank of Tanzania · March 2026 · Monthly Economic Review
Tanzania Shilling Stability vs National Debt
A deep-dive into how Tanzania's TZS 2,570/USD exchange rate held course against a rising national debt of USD 51.1 billion — examining the Bank of Tanzania's liquidity strategies, the currency's resilience, and what mounting obligations mean for investors and businesses.
📅 Data Period: February 2026🏦 Source: Bank of Tanzania, Ministry of Finance🔍 Analysis: TICGL Research Unit🌍 Currency: TZS / USD
TZS/USD (Feb 2026 Avg)
2,570.24
▲ +3.14% YoY depreciation
Total National Debt
USD 51.1B
▲ External: 70.2% of total
External Debt Stock
USD 35.86B
▼ -0.1% MoM (Feb 2026)
Gross Official Reserves
USD 6.24B
≈ 4.8 months import cover
Overview
The Shilling's Managed Stability in a High-Debt Environment
In February 2026, the Tanzanian shilling averaged TZS 2,570.24 per US dollar — a moderate annual depreciation of 3.14% from the TZS 2,492.05 recorded in February 2025. This gradual adjustment, supported by the Bank of Tanzania's active liquidity management, masked a more complex story: Tanzania's total national debt had climbed to USD 51,112.8 million, with 70.2% held as external obligations.
Annual TZS Depreciation
3.14%
Feb 2025: TZS 2,492 → Feb 2026: TZS 2,570 per USD. Gradual, managed depreciation.
National Debt (Feb 2026)
USD 51.1B
Total committed external + domestic debt. Down 0.2% month-on-month from January 2026.
Domestic Debt Stock
TZS 38,782B
Up 0.5% MoM. Concentrated in long-term Treasury bonds (80.8% share).
TICGL Key Insight: The 3.14% annual depreciation of the TZS is notably controlled given that Tanzania's external debt obligations require consistent hard-currency outflows. External debt service payments totalled USD 98.9 million in February 2026 alone — comprising USD 35.4M in principal and USD 63.5M in interest — creating persistent demand for foreign exchange that could pressure the shilling without active central bank intervention.
The Bank of Tanzania's policy framework during this period focused on steering the 7-day Interbank Cash Market (IBCM) rate within a ±2 percentage point corridor around the Central Bank Rate (CBR) of 5.75%. This disciplined monetary posture kept shilling liquidity adequate while managing the exchange rate's trajectory through the Interbank Foreign Exchange Market (IFEM).
Exchange Rate Dynamics
TZS/USD Trend & Bank of Tanzania IFEM Interventions
The shilling's trajectory from early 2025 through February 2026, alongside the Bank of Tanzania's net foreign exchange sales in the IFEM, reveals the central bank's active role in smoothing exchange rate volatility while accommodating structural depreciation pressures from debt servicing.
TZS/USD Monthly Average Exchange Rate — Feb 2025 to Feb 2026
Source: Bank of Tanzania · IFEM Data
Source: Bank of Tanzania IFEM Data, Monthly Economic Review March 2026. Chart by TICGL Research.
IFEM Activity (USD Million)
Banks' Sales vs BoT Net Interventions
Source: Bank of Tanzania
7-Day IBCM Rate vs Central Bank Rate
Monetary Policy Corridor (2025–2026)
Source: Bank of Tanzania
Monthly Exchange Rate & Intervention Data
Period
TZS/USD (Avg)
Change vs Prior Month
BoT Net Sale/Purchase (USD M)
IFEM Volume (USD M)
Assessment
Feb 2025
2,492.05
—
+58.0 (net sale)
~90
Baseline
Mar 2025
~2,500
+0.3%
—
—
Stable
Apr 2025
~2,510
+0.4%
—
—
Mild depreciation
Jun 2025
~2,530
+0.8%
—
—
Pressure building
Sep 2025
~2,545
+0.6%
—
—
Managed drift
Dec 2025
2,447.50
-0.4%
—
—
Appreciation (EoP)
Jan 2026
~2,518
+2.9%
+58.0
88.2
Support activated
Feb 2026
2,570.24
+2.1%
+128.8 (surge)
184.9
Active intervention
⚠ Notable Surge in February 2026: IFEM volume doubled to USD 184.9 million (from USD 88.2M in January), with the Bank of Tanzania making a net sale of USD 128.8 million — more than double the January figure. This surge was supported by higher hard-currency inflows from traditional crop exports and the mining sector, but the scale of central bank involvement signals that market-driven supply alone was insufficient to stabilize the shilling amid debt service pressures.
Tanzania's national debt is structured across external and domestic components, with multilateral creditors remaining the largest single group. Understanding this architecture is critical to assessing the shilling's long-term vulnerability.
Total National Debt
USD 51,112.8M
End of February 2026. Down 0.2% from January 2026 (USD 51,221.0M).
Tanzania's external debt currency composition directly determines the TZS's vulnerability to exchange rate movements. With 66% of external debt denominated in US dollars, every 1% depreciation of the shilling against the USD increases the domestic-currency value of this debt portfolio by approximately TZS 238 billion at current exchange rates.
USD (66.0%)
66.0%
Euro (17.7%)
17.7%
Chinese Yuan (6.5%)
6.5%
Other (9.8%)
9.8%
Historical Trajectory
Domestic Debt Growth vs Shilling Depreciation — 8-Year View
Tanzania's domestic debt has expanded nearly threefold since 2018, from TZS 13.7 trillion to TZS 38.8 trillion in February 2026. Mapping this against the TZS/USD end-of-period exchange rate reveals the relationship between domestic financing pressures and currency trajectory.
Domestic Debt Stock (TZS Trillion) vs End-of-Period Exchange Rate (TZS/USD)
February Snapshots — 2018 to 2026
Source: Ministry of Finance, Bank of Tanzania. Chart by TICGL Research.
Domestic Government Debt by Instrument (Feb 2026)
Instrument
Feb-25 (TZS B)
Jan-26 (TZS B)
Feb-26 (TZS B)
Share % (Feb-26)
MoM Change
Government Bonds (T-Bonds)
27,073.7
31,015.1
31,333.2
80.8%
▲ +1.0%
Overdraft (Non-securitized)
4,887.5
5,627.2
5,659.6
14.6%
▲ +0.6%
Treasury Bills
1,847.4
1,821.4
1,653.0
4.3%
▼ -9.2%
Government Stocks
187.1
135.7
135.7
0.4%
— 0.0%
Tax Certificates
0.1
0.1
0.1
0.0%
— 0.0%
TOTAL DOMESTIC DEBT
34,014.1
38,599.6
38,781.7
100%
▲ +0.5%
Creditor Concentration Risk: Commercial banks and pension funds hold 54.9% of domestic debt (27.9% and 27.0% respectively). This concentration means domestic debt servicing costs — TZS 875.2 billion in February 2026 alone (TZS 472.2B principal + TZS 403B interest) — flow back primarily through the domestic financial system, creating relatively contained exchange rate pressure compared to external debt service.
Debt Service & Foreign Reserves
Debt Servicing Demands vs Official Reserves Buffer
The central question for TZS stability is whether Tanzania's foreign exchange reserves are sufficient to absorb the hard-currency demands of external debt servicing without forcing disorderly depreciation. February 2026 data shows a narrow but adequate buffer.
Covers 4.8 months of imports. Above EAC (4.5M) and national (4.0M) benchmarks.
Reserves vs External Debt
17.4%
Reserves as % of disbursed external debt. Key coverage ratio for shilling protection.
Gross Official Reserves (USD B) & Import Cover Months — Feb 2022 to Feb 2026
Compared against EAC (4.5M), SADC (6.0M) and National (4.0M) benchmarks
Source: Bank of Tanzania Monthly Economic Review. Chart by TICGL Research.
External Debt Flows — Monthly Disbursements vs Service Payments
Period
Disbursements (USD M)
Principal (USD M)
Interest (USD M)
Total Service (USD M)
Net Flow (USD M)
TZS Pressure
Feb-25
726.4
66.7
49.7
116.5
+609.9
Low
Mar-25
421.9
96.4
47.0
143.4
+278.5
Low
Apr-25
133.9
142.3
13.2
155.5
-21.7
Moderate
May-25
112.9
286.2
118.4
404.7
-291.8
High
Jun-25
1,161.9
185.4
73.7
259.1
+902.8
Low
Oct-25
171.1
262.0
82.3
344.3
-173.2
Moderate-High
Jan-26
143.5
81.5
17.5
99.0
+44.4
Low
Feb-26
83.8
35.4
63.5
98.9
-15.1
Moderate
⚠ May 2025 Stress Event: In May 2025, Tanzania experienced one of its highest single-month debt service burdens at USD 404.7 million — resulting in a net transfer of -USD 291.8 million. This type of episodic surge in hard-currency outflows represents a structural risk to TZS stability. The shilling's managed depreciation trajectory suggests these peaks were absorbed through reserve drawdowns and central bank IFEM interventions rather than market-driven adjustment.
Debt Utilisation
What Tanzania Borrowed For — Debt by Use of Funds
The composition of external debt by sector of use matters for assessing whether Tanzania's borrowing is productivity-enhancing — and thus capable of generating the foreign exchange needed to service it — or primarily financing consumption and transfers with limited export-generation potential.
Disbursed Outstanding External Debt by Use of Funds (Feb 2026)
% Share — USD 35.33 Billion Total
Source: Ministry of Finance & Bank of Tanzania
Sector / Use of Funds
Feb-25 (%)
Jan-26 (%)
Feb-26 (%)
Trend
FX Generation Potential
Transport & Telecommunication
21.2
21.8
21.9
▲ Rising
Moderate (freight income, logistics)
BoP & Budget Support
20.9
22.6
22.5
▲ Rising
⚠ Low — direct budget financing
Social Welfare & Education
20.0
19.4
19.3
▼ Falling
Low (human capital, long-term)
Energy & Mining
13.1
12.0
12.0
▼ Falling
High (export revenue generator)
Agriculture
4.8
5.3
5.3
▲ Rising
Moderate-High (traditional exports)
Real Estate & Construction
4.8
4.9
4.9
— Stable
Low (domestic asset)
Industries
3.6
3.7
3.7
— Stable
Moderate (import substitution)
Finance & Insurance
4.5
3.5
3.5
▼ Falling
Moderate
Tourism
1.6
1.8
1.8
▲ Rising
Very High (USD earner)
Other
5.5
4.9
4.9
▼ Falling
Mixed
TICGL Analysis — Productivity vs. Debt Service: The combined share of BoP/Budget Support (22.5%) and Social Welfare/Education (19.3%) — totalling 41.8% of external debt — represents borrowing with limited short-to-medium-term foreign exchange generating capacity. This structural feature means Tanzania must rely on its gold exports, tourism receipts, and growing manufacturing base to generate the USD required to service an increasingly large external debt portfolio, making the shilling's stability inherently dependent on commodity prices and tourism flows.
TICGL Synthesis
What This Means for Tanzania — Investment & Risk Perspective
The interplay between TZS stability and national debt levels creates a nuanced risk profile for investors and businesses operating in Tanzania in 2026.
✅ Resilience Factor
Managed Drift
At 3.14% annual depreciation, TZS is among the more stable SSA currencies. Active BoT management and strong reserves provide a buffer.
⚠ Watch Factor
USD Debt Concentration
66% of external debt in USD means each TZS weakening directly inflates debt servicing costs in shilling terms — a feedback loop risk.
🔴 Risk Factor
Episodic FX Stress
Quarterly debt service peaks (May 2025: USD 404.7M) can create sudden pressure on reserves and TZS, especially if export receipts disappoint.
For investors, the shilling's managed trajectory reflects disciplined monetary governance at the Bank of Tanzania rather than fundamental overvaluation or undervaluation. The 5.75% Central Bank Rate, tight IBCM corridor management, and growing foreign reserves (USD 6.24B as of February 2026) collectively underpin the currency's resilience.
However, the structural expansion of external debt — rising from USD 32.8B (February 2025) to USD 35.9B (February 2026), a 9.4% increase — means Tanzania must sustain export growth, particularly in gold and tourism, to avoid the debt-currency depreciation spiral that has challenged other African economies.
The positive signal is that gold exports surged 35.8% year-on-year to USD 4.97B in the year ending February 2026, and tourism receipts rose 8.8% to USD 7.52B. These hard-currency inflows, if sustained, provide a credible counter-weight to growing debt service obligations and support the case for continued shilling stability in the 3-5% annual depreciation range.
Government Securities Market in Tanzania 2025–2026 | Treasury Bills & Bonds Analysis | TICGL
TICGL Economic Research·Tanzania Investment & Consultant Group Ltd·Published March 2026
📊 Financial Markets Analysis
Government Securities Market in Tanzania: 2025–2026
An in-depth analysis of Tanzania's Treasury Bills, Treasury Bonds, and Interbank Cash Market —
covering auction performance, monetary policy transmission, and economic implications for Tanzania's growth trajectory.
Published byTICGL Research
Data PeriodOct 2025 – Mar 2026
MarketTanzania (TZS)
SourceBank of Tanzania (BoT)
11.30%
10-Yr Bond Yield
January 2026 Auction
TZS 2,869B
IBCM Turnover
January 2026
34%
Bond Oversubscription
Jan 2026 10-Yr Auction
73.2%
7-Day Interbank Share
Dominant Tenor
5.75%
Central Bank Rate
BoT CBR Q1 2026
6.3%
GDP Growth Forecast
Tanzania 2026
Section 01
Government Securities Market — Overview
The Government Securities Market is where the Tanzanian government raises domestic funds by issuing
Treasury Bills (short-term) and Treasury Bonds (long-term) through competitive auctions
conducted by the Bank of Tanzania (BoT). It serves as the primary mechanism for non-inflationary budget
financing and development project funding.
As of early 2026, Tanzania's government securities market exhibits remarkable resilience: auctions remain consistently
oversubscribed, yields have stabilized within the 9–12% range, and institutional demand continues to grow — reflecting
investor confidence underpinned by stable inflation at 3.2% and projected GDP growth of 6.0–6.3%.
Key Context
Tanzania's domestic debt stock reached TZS 38,114.8 billion in October 2025 (~17% of GDP),
with Treasury Bonds comprising ~70% of the total, reflecting a deliberate strategy toward longer-duration, more stable financing.
Main Market Instruments
📋
Treasury Bills
Maturity: 35 · 91 · 182 · 364 Days
Short-term government debt instruments used for liquidity management and immediate budget financing. Auctioned weekly by the Bank of Tanzania via competitive bidding.
🏛️
Treasury Bonds
Maturity: 2 – 25 Years
Long-term government securities issued to finance development projects: infrastructure, hydropower, roads, and agriculture. Provide stable, predictable debt servicing costs.
Typical Buyers of Government Securities
Commercial Banks
Pension Funds
Insurance Companies
Institutional Investors
Why the Government Securities Market Matters
Importance of Government Securities Market in Tanzania
Function
Explanation
Impact
Government Financing
Supports budget deficits and development projects without printing money
High
Monetary Policy Tool
Used by Bank of Tanzania (BoT) for open-market liquidity management
High
Benchmark Interest Rate
Treasury yields serve as reference rates for loans, mortgages, and other instruments
Medium
Safe Investment Asset
Low-risk option for institutional investors — pension funds, banks, insurers
Medium
Debt Sustainability
Reduces reliance on external (foreign currency) borrowing, mitigating FX risk
High
Source: Bank of Tanzania; TICGL Analysis 2026
2
Section 02
Treasury Bills — Auction Performance
Treasury Bill auctions are conducted weekly by the Bank of Tanzania across four tenors: 35-day, 91-day,
182-day, and 364-day instruments. From October 2025 through January 2026, every auction was oversubscribed,
a clear signal of sustained institutional confidence in short-term government paper.
Yields edged slightly upward from the 9–10% range in October 2025 to 11–12% by January 2026 — a reflection of
tightening liquidity conditions and evolving market expectations ahead of the central bank's
policy decisions. Crucially, this yield movement occurred within an orderly market, with the
government consistently absorbing its full tender each auction cycle.
Treasury Bills Auction Results (Oct 2025 – Jan 2026)
Month
Tender Size (TZS Bn)
Bids Submitted (TZS Bn)
Successful Bids (TZS Bn)
Wtd. Avg. Yield
Oversubscription
Oct 2025
~560
~740
~560
9.0 – 10.0%
+32%
Nov 2025
~560
~720
~560
~10.0%
+29%
Dec 2025
~560
~800
~560
~11.0%
+43%
Jan 2026
~560
~840
~560
11.0 – 12.0%
+50%
Source: Bank of Tanzania Auction Reports, TICGL compilation. Bids submitted and tender sizes are approximations based on BoT data.
Treasury Bills: Demand vs. Tender Size & Yield Trend
Monthly auction performance — Oversubscription and weighted average yield movement
Oct 2025 – Jan 2026
Bid Oversubscription Rate — Monthly Trend
Percentage by which bids submitted exceeded the government's tender size
Investor Demand Indicator
✅ Key Observation
Every Treasury Bill auction from October 2025 to January 2026 was oversubscribed — meaning the market offered more funds
than the government required. This indicates exceptionally high investor confidence in Tanzanian government debt instruments.
The rise in oversubscription from ~32% (Oct 2025) to ~50% (Jan 2026) signals deepening domestic capital markets.
3
Section 03
Treasury Bonds — 10-Year Auction Analysis
Alongside the weekly Treasury Bill auctions, the Bank of Tanzania conducts periodic Treasury Bond auctions
for longer tenors ranging from 2 to 25 years. These bonds are critical instruments for financing Tanzania's
long-term development agenda — hydropower, roads, industrial zones, and social infrastructure.
The January 2026 10-year Treasury Bond auction stands as a landmark result: oversubscribed by approximately
34%, with a weighted average yield of 11.30% — a borrowing cost that remains favorable by regional standards.
The high demand reflects growing pension fund and insurance company allocations to domestic long-duration paper.
10-Year Treasury Bond Auction — January 2026
Indicator
Value (TZS Billion)
Interpretation
Tender Size
144.6
Government's target raise for this auction
Total Bids Received
194.1
Market offered TZS 49.5 billion above the tender
Successful Bids
118.9
Government accepted below tender — managing yield levels
Weighted Average Yield
11.30%
Favorable long-term borrowing cost for the government
Oversubscription Rate
~34%
Strong institutional demand for long-duration GoT paper
Source: Bank of Tanzania, January 2026 Bond Auction Results
10-Year Treasury Bond: Tender vs. Bids vs. Successful Allocations
Visual breakdown of the January 2026 auction — government's strategic acceptance below tender
Jan 2026
Yield Comparison: Treasury Bills vs. 10-Year Treasury Bond
Tanzania's yield curve — risk-return relationship across maturities
Yield Curve Snapshot
⚠️ Strategic Note
The government accepted TZS 118.9 billion — below the TZS 144.6 billion tender — to maintain favorable
yield levels and avoid upward pressure on long-term borrowing costs. This disciplined approach to debt management
demonstrates sound fiscal stewardship by the Ministry of Finance and BoT.
4
Section 04
Interbank Cash Market — IBCM Analysis
The Interbank Cash Market (IBCM) is where commercial banks lend and borrow short-term funds
among themselves to manage daily liquidity positions. It serves as a critical transmission mechanism
for monetary policy — interest rates here respond quickly to the Central Bank Rate (CBR) set by the Bank of Tanzania.
In January 2026, total IBCM turnover reached TZS 2,868.9 billion, a slight decline from December's
TZS 3,481.9 billion — reflecting post-year-end normalisation rather than market stress. The dominant tenor was
7-day transactions, accounting for 73.2% of all interbank activity.
IBCM Market Activity — January 2026
Indicator
Value
Context
Total Market Turnover (Jan 2026)
TZS 2,868.9 Bn
Active market — supports smooth bank liquidity operations
Previous Month Turnover (Dec 2025)
TZS 3,481.9 Bn
Higher Dec activity driven by year-end liquidity demand
Month-on-Month Change
–17.6%
Normalisation post year-end, not a sign of market stress
Dominant Tenor
7-Day Transactions
Banks prefer 7-day instruments for predictable short-term management
Share of 7-Day Transactions
73.2%
Signals preference for medium short-term over overnight borrowing
Source: Bank of Tanzania Monthly Economic Review, January 2026
Interbank Transaction Tenor Breakdown
~15%
Overnight
~12%
2–6 Days
73.2%
7 Days
Chart: IBCM transaction share by tenor — January 2026. The 7-day rate serves as a benchmark indicator of overall banking system liquidity.
Interbank Cash Market — Monthly Turnover Trend
TZS Billion — estimated turnover Q4 2025 through January 2026
IBCM Activity
IBCM Transaction Structure by Tenor — January 2026
Share of interbank lending by maturity bucket
Tenor Distribution
Monetary Policy Transmission Chain
BoT Sets
CBR: 5.75%
→
IBCM Responds
7-Day Rate
→
Banks Price
Lending Rates
→
Economy
Credit Growth
Bank of Tanzania Liquidity Management Instruments
Instrument
Direction
Purpose
Effect on IBCM
Reverse Repo
Inject ↑
BoT buys securities from banks — adds liquidity
Pushes IBCM rate down toward CBR floor
Repo
Absorb ↓
BoT sells securities to banks — drains liquidity
Pushes IBCM rate up within policy corridor
Government Securities (OMO)
Dual
Open Market Operations — fine-tune liquidity
Anchors overnight and short-term rates
Standing Lending Facility
Emergency ↑
Emergency liquidity backstop for commercial banks
Sets ceiling on IBCM rates
Source: Bank of Tanzania Monetary Policy Framework; TICGL Analysis 2026
How Government Securities and Interbank Market Interact
🏛️ Government Securities Market
▸ Used for government borrowing and fiscal financing
▸ Provides safe, liquid investment assets for banks
▸ Influences banking system liquidity when banks buy securities
▸ Sets the benchmark yield curve for the economy
🏦 Interbank Cash Market (IBCM)
▸ Used for bank-to-bank short-term liquidity management
▸ Responds to liquidity changes caused by T-Bill purchases
▸ Transmits BoT monetary policy to the real economy
💡 The Feedback Loop Explained
When banks purchase large volumes of Treasury Bills, their available cash reserves fall. To meet reserve requirements or fund daily operations,
these banks then borrow from the interbank market. This raises IBCM demand and can push short-term rates higher —
creating a direct feedback loop between the government securities market and interbank liquidity conditions.
5
Section 05
Key Market Indicators — Tanzania, January 2026
The table below synthesizes the most critical data points from Tanzania's financial markets as of January 2026,
drawing from Bank of Tanzania publications and TICGL research. Together, these indicators paint a picture of a
stable, well-functioning domestic financial system.
Indicator
Value
Status
Signal
Treasury Bill Demand
Oversubscribed every auction
✅ Strong
High investor confidence in short-term GoT debt
T-Bill Weighted Avg. Yield (Jan 2026)
11.0 – 12.0%
Elevated
Tight liquidity; slight upward yield pressure
10-Year Bond Yield
11.30%
✅ Stable
Favorable long-term borrowing cost
10-Year Bond Oversubscription
~34%
✅ Strong
Deep institutional appetite for long-duration GoT bonds
IBCM Turnover (Jan 2026)
TZS 2,868.9 Bn
Active
Healthy bank-to-bank liquidity trading
Dominant IBCM Tenor
7-Day
Normal
Short-term focus reflects standard liquidity management
Share of 7-Day Transactions
73.2%
Dominant
Market benchmark for system-wide liquidity
Central Bank Rate (CBR)
5.75%
✅ Stable
Accommodative stance supporting growth targets
Domestic Debt / GDP
~17%
✅ Sustainable
Well within international thresholds
Tanzania Inflation (Feb 2026)
3.2%
✅ Within Target
BoT target range: 3–5%
Source: Bank of Tanzania; National Bureau of Statistics; TICGL Research, March 2026
Tanzania Financial Market Health — Multi-Metric Overview
Composite assessment across six dimensions — January 2026 (scores are illustrative normalised ratings)
Market Dashboard
Related TICGL Resources
Explore more from Tanzania's leading economic intelligence platform
Economic Implications — Tanzania's Growth & Development
The government securities market is far more than a financing mechanism — it is a strategic lever
for Tanzania's macroeconomic management. Its performance directly shapes the country's fiscal space,
monetary policy effectiveness, investor confidence, and long-run growth potential.
Tanzania's economy is forecast to grow at 6.0–6.3% in 2026, up from 5.9% in 2025, with the government
securities market playing a central enabling role. Domestic securities fund approximately 34% of the FY 2025/26
budget (TZS 49.2 trillion), channelling resources into infrastructure, agriculture, mining, and construction —
the four pillars of Tanzania's current growth model.
Tanzania GDP Growth Trajectory
2023
5.1%
Actual GDP Growth
2024
5.5%
Actual GDP Growth
2025
5.9%
Actual GDP Growth
2026 F
6.3%
Forecast (BoT/IMF)
2027+ F
6.9%
Medium-Term Target
Tanzania GDP Growth Rate — Historical & Forecast (2021–2027)
Percentage annual growth — shaded area represents government securities market contribution period
Growth Trajectory
📌 Context
Tanzania's public debt stands at approximately 40.6% of GDP in FY 2025/26 — well below the
IMF/World Bank risk threshold of 55% for low-income countries. This fiscal headroom enables the government
to continue accessing domestic capital markets without triggering debt sustainability concerns.
7
Implication 01
Financing Development Projects — Fiscal Space & Budget Support
The government securities market funds ~34% of Tanzania's FY 2025/26 national budget (TZS 49.2 trillion),
providing non-inflationary financing for critical development priorities. Low average yields of approximately
10.8% keep annual debt servicing at a manageable ~6.5% of the budget — freeing significant
fiscal resources for productive investment.
Major beneficiaries include the hydropower sector (planned additions of 1.2–1.5% to GDP), road infrastructure,
and agricultural programmes — which together generated ~160,000 new jobs from new investments in 2025.
The government's Vision 2050 industrialisation goals depend critically on this market's continued depth and stability.
FY 2025/26 Government Budget — Financing Sources
Estimated share of TZS 49.2 trillion budget by funding mechanism
Fiscal Structure
Domestic Borrowing & Debt Metrics — Tanzania 2025/26
Metric
FY 2025/26
FY 2026/27 (Projected)
Assessment
Total Domestic Borrowing
~TZS 12.8 Tn
TZS 15.24 Tn
Increasing
Domestic Debt Stock
TZS 38,114.8 Bn
Est. TZS 42,000+ Bn
Manageable
Domestic Debt / GDP
~17%
~18–19%
Sustainable
Total Public Debt / GDP
~40.6%
~42%
Below 55% threshold
Debt Service / Budget
~6.5%
~7–8%
Moderate
Bonds Share of Domestic Debt
~70%
~72%
Longer-duration stability
Avg. Weighted Yield (T-Bills)
~10.8%
~11–12%
Slight upward pressure
Source: Bank of Tanzania; Ministry of Finance Tanzania; TICGL Analysis, March 2026
Key Sectors Financed Through Government Securities — FY 2025/26
Estimated allocation of domestically-financed development expenditure by sector
Sectoral Allocation
✅ Development Impact
Tanzania's domestic securities market financed a hydropower expansion program expected to add
1.2–1.5 percentage points to GDP. Combined with road infrastructure spending,
this domestically-financed investment created approximately 160,000 new jobs in 2025 —
demonstrating the market's direct link to inclusive growth.
8
Implication 02
Monetary Policy Transmission — Stability & Inflation Control
Government securities are the primary instrument through which the Bank of Tanzania conducts
Open Market Operations (OMO) — injecting or absorbing liquidity as needed to keep the banking
system in balance. This transmission chain runs from the Central Bank Rate (CBR at 5.75% in Q1 2026)
through the interbank market, to commercial lending rates, and ultimately to the real economy.
The effectiveness of this chain is validated by Tanzania's inflation performance: at 3.2% in
February 2026, inflation sits squarely within the Bank of Tanzania's 3–5% target band —
shielding households from price instability and supporting real consumer purchasing power.
Private credit growth of 16.1% year-on-year further attests to the health of
monetary transmission.
Monetary Policy & Stability Indicators — Q1 2026
Indicator
Value
Target / Benchmark
Status
Central Bank Rate (CBR)
5.75%
Policy corridor anchor
Accommodative
Tanzania Inflation Rate (Feb 2026)
3.2%
BoT target: 3–5%
✅ On Target
Private Sector Credit Growth (YoY)
16.1%
Target: 20%+
Below target
T-Bill Yield Serving as Benchmark
11.0–12.0%
Market lending rate reference
Elevated
Bank Holdings of Gov. Securities
~70% of IBCM assets
—
Crowding-out risk
Foreign Exchange Reserves
USD 6.3 Billion
Min. 4 months import cover
~5 months cover
Source: Bank of Tanzania Monetary Policy Statement Q1 2026; NBS Tanzania; TICGL Research
Inflation vs. Private Sector Credit Growth — Tanzania 2023–2026
Dual-axis comparison: inflation control (left) vs. credit expansion (right)
Monetary Indicators
⚠️ Crowding-Out Risk
Commercial banks' heavy allocation to government securities (~70% of liquid assets) may
restrict credit availability for private sector SMEs. Private sector credit growth
at 16.1% YoY remains below the 20%+ target needed to drive job creation among Tanzania's youth
(unemployment ~13.4%). Policymakers must balance fiscal needs with private-sector lending capacity.
9
Implication 03
Investor Confidence — Domestic Capital Mobilisation & FDI
Consistent oversubscription of government securities sends a powerful signal to both domestic and
international investors: Tanzania's financial system is credible, stable, and deepening.
This confidence effect radiates beyond the bond market — contributing to a favourable environment
for Foreign Direct Investment (FDI), which reached approximately USD 11 billion in 2025,
with a target of USD 15 billion for 2026.
Pension funds, insurance companies, and other institutional investors — whose domestic savings are
channelled into government paper — represent significant untapped capital. Analysts
estimate that redirecting excess auction capacity (TZS 50–100 billion per auction above government needs)
toward green bonds or SME guarantee facilities could add 0.5–1.0 percentage points
to annual GDP growth.
Tanzania FDI & Investment Confidence — Key Metrics
Indicator
2024
2025
2026 Target
Driver
FDI Inflows
~USD 9.5 Bn
~USD 11 Bn
USD 15 Bn
Policy reforms, stable macro environment
New Investment Projects Approved
~780
927
1,000+
TIC facilitation, lower regulatory friction
Jobs from New Investments
~130,000
~160,000
180,000+
Infrastructure-led investment expansion
Household Savings Rate
~11%
~12%
13–14%
Deepening financial sector access
External Debt Share of Total Debt
~71%
~69.5%
68%
Shift toward domestic financing
Foreign Reserves (Import Cover)
~4.7 months
~5.0 months
5+ months
Strong gold & export earnings
Source: Tanzania Investment Centre (TIC); Bank of Tanzania; IMF Article IV 2025; TICGL Analysis
Tanzania FDI Inflows vs. New Investment Projects — 2021–2026
USD Billion inflows (bars) and number of approved projects (line) — reflects market confidence signal
Investment Climate
✅ Capital Market Opportunity
Excess bids in Treasury Bill and Bond auctions (TZS 50–100 billion above tender per cycle) signal significant
untapped domestic capital. Structured products such as green bonds, housing bonds, or SME
guarantee instruments could redirect this liquidity into higher-impact productive investment — potentially
adding 0.5–1.0% to annual GDP growth and accelerating Tanzania's transition to self-reliant, inclusive development.
10
Implication 04
Risks & Challenges — Headwinds to Sustained Growth
While Tanzania's government securities market performs strongly, it is not without risks.
The primary concern is the crowding-out effect: as the government borrows more
domestically to fund a projected TZS 15.24 trillion in FY 2026/27, it competes directly with
private sector borrowers for the same pool of bank funds. This dynamic can constrain SME lending,
slow private investment diversification, and limit youth employment opportunities.
External shocks — particularly oil price volatility and tightening global financial conditions —
could raise yields beyond the current 11–12% range, increasing debt-servicing costs and squeezing
fiscal space. Analysts note Tanzania's strong buffers (USD 6.3 billion reserves, stable gold export
earnings) provide meaningful protection, but sustained vigilance remains essential.
Opportunities vs. Risks — Balanced Assessment
✅ Opportunities
▸ Deepening domestic capital markets through longer-tenor issuance (25-year bonds)
▸ Green bond issuance to fund climate-resilient infrastructure
▸ SME guarantee facilities funded by excess auction liquidity
▸ Pension fund diversification into productive sectors
▸ Reducing external borrowing dependence — lower FX risk
▸ Continued oversubscription signals room for larger tender sizes
Anchors inflation at 3.2%; supports 6.3% GDP forecast; low external risk
External debt risks if global rates rise, though domestic focus mitigates
Net Positive
Investment Attraction
927 new projects in 2025 (~USD 11B); stable credit ratings; policy reforms
Youth unrest or policy gaps could deter FDI; job creation may slow
Net Positive
Monetary Policy
Effective OMO tool; inflation within target; reserves at 5 months cover
Bank-heavy holdings (~70%) risk reducing SME lending if liquidity tightens
Moderate
Debt Sustainability
Total debt-to-GDP ~40.6% — well below 55% IMF threshold
FY 2026/27 borrowing (TZS 15.24 Tn) increases pressure on sustainability
Sustainable
Employment & Inclusion
~160,000 jobs from infrastructure-linked investments in 2025
Crowding-out limits SME finance; youth unemployment persists at ~13.4%
Watch
Source: TICGL Economic Analysis; Bank of Tanzania; IMF; World Bank Tanzania Economic Update 2025
Tanzania Debt Sustainability — Key Ratios vs. Risk Thresholds
Current levels (blue) plotted against IMF/World Bank risk thresholds (red dashed). Values in % of GDP.
Debt Sustainability
Four Pillars of Economic Impact
🏗️
Infrastructure & Fiscal Financing
Domestic securities fund ~34% of the national budget, prioritizing hydropower
(+1.2–1.5% GDP), roads, and industrial zones. Average borrowing cost of ~10.8% keeps debt
servicing at a sustainable 6.5% of budget.
TZS 49.2 Tn — FY 2025/26 Budget Size
📉
Inflation Anchoring & Stability
BoT's use of securities for Open Market Operations keeps inflation at 3.2%
within the 3–5% target. This protects household purchasing power and anchors business
planning confidence across all sectors.
3.2% — Tanzania Inflation, February 2026
💰
FDI & Investment Climate
Consistent oversubscription signals macro credibility, contributing to USD 11B in FDI
in 2025. Stable credit outlook and policy reforms target USD 15B by end-2026,
with 927 new approved investment projects.
USD 11 Bn — Tanzania FDI Inflows, 2025
⚠️
Crowding-Out & SME Risk
Banks holding ~70% of liquid assets in government securities may limit SME credit
access. Private credit growth at 16.1% remains below the 20% target.
Youth unemployment at 13.4% requires urgent private-sector catalysis.
13.4% — Youth Unemployment Rate, 2025
11
Section 11 — Conclusion
Conclusion — Tanzania's Financial Markets in 2026
Tanzania's government securities market and interbank cash market together constitute
a robust, maturing financial infrastructure capable of supporting the country's
ambitious development agenda. The evidence from October 2025 through January 2026 is unambiguous:
every auction was oversubscribed, yields remained within manageable bounds, the interbank market
cleared efficiently, and inflation stayed firmly within target.
These outcomes do not happen by chance. They reflect disciplined monetary management by the
Bank of Tanzania, a deepening institutional investor base, and growing market
confidence in Tanzania's macroeconomic fundamentals. With GDP growth forecast at 6.3% for 2026
and a medium-term target of 6.9%, the securities market is well-positioned to remain a cornerstone
of Tanzania's self-reliant growth strategy.
The primary challenge ahead is ensuring that this financial strength translates into
broad-based, inclusive prosperity — particularly for SMEs, youth, and rural
communities who remain underserved by formal financial markets. Innovative instruments such as
green bonds, infrastructure bonds with retail participation, and SME credit guarantee facilities
could bridge this gap — turning oversubscribed government auctions from a fiscal tool into
an engine of inclusive growth.
✅ TICGL Research Summary
Tanzania's Financial Markets Remain Stable, Deep, and Growth-Enabling
The convergence of consistently oversubscribed auctions, a functioning interbank market,
controlled inflation, and growing FDI inflows positions Tanzania as one of East Africa's
most credible domestic capital markets. With disciplined management, the securities market
can accelerate medium-term GDP to 6.9% and deliver more inclusive development outcomes.
✓
Treasury Bill auctions oversubscribed every month Oct 2025–Jan 2026, with demand rising to 50% above tender
✓
10-Year Treasury Bond yield at 11.30% — favourable long-term borrowing cost for development financing
✓
Interbank market turnover of TZS 2,868.9 Bn in Jan 2026 — efficient bank liquidity management
✓
Inflation at 3.2% within BoT target; GDP growth forecast 6.3% for 2026; debt-to-GDP sustainable at ~40.6%
✓
FDI inflows reached USD 11 Bn in 2025 — investor confidence in Tanzania's macro stability is rising
✓
Key risk: crowding-out of private credit — requires innovative instruments to broaden financial inclusion
Tanzania Financial Market Composite — Key Metrics at a Glance (Jan 2026)
Normalised performance score (0–100) across six market dimensions — for comparative context
Composite Scorecard
Sources:Bank of Tanzania (BoT) Monthly Economic Reviews & Auction Results·National Bureau of Statistics (NBS) Tanzania·Ministry of Finance & Planning Tanzania·Tanzania Investment Centre (TIC)·IMF Article IV Consultation 2025·World Bank Tanzania Economic Update 2025·TICGL Economic Research Division, March 2026
Microfinance Institutions & SME Development in Tanzania 2025 | TICGL Research
📊 TICGL Economic Case Studies (TECS) · February 2026
The Contribution of Microfinance Services
to the Development of SMEs in Tanzania
A proposed evaluation of the role of Microfinance Institutions (MFIs) in supporting
Micro and Small Enterprises (MSEs) — trends, challenges and opportunities for Tanzania's
financial ecosystem in 2025.
✍️ Amran Bhuzohera — Senior Economist & Research Lead, TICGL🔬 420 MFIs Surveyed📅 Nov 2024 – April 2025 (Data collection)
420
MFIs Surveyed
TZS 800B
Total Loan Portfolio
49%
MFIs with 5–10% Default
62%
Loans Below TZS 5M
25%
Digital Finance Opportunity
📄
Abstract & Key Findings
Microfinance Institutions (MFIs) play a critical role in financial inclusion by providing capital to
Micro and Small Enterprises (MSEs) in Tanzania. Despite their importance, MFIs face challenges
such as high default rates, limited access to funding, regulatory barriers, and operational
inefficiencies. This study examines the landscape of MFIs, their risk management strategies, loan
portfolio allocations, and recommendations for strengthening financial access for MSEs.
30%
Trade & Retail — Largest Loan Sector
22%
Agriculture Loan Share
18%
Manufacturing Share
62%
Loans Below TZS 5 Million
49%
MFIs: Default Rate 5–10%
44%
MFIs Cite High Borrowing Costs
28%
See Govt-Backed Funding as Key
25%
Emphasise Digital Finance
Loan Portfolio by Business Sector
Distribution of MFI loan allocation across five key economic sectors (TZS 800 billion total)
MFI Default Rate Distribution
Percentage of surveyed MFIs reporting each default rate band (n = 410 MFIs)
Conclusion:
To enhance financial access, MFIs must adopt alternative credit scoring models, expand digital
lending platforms, and strengthen public-private partnerships. Policymakers should consider
tiered regulatory frameworks, interest rate flexibility, and credit guarantee programmes to
support sustainable lending to MSEs.
Introduction
🎯
1. Introduction & Research Objectives
This research analyses the role of Microfinance Institutions (MFIs) in supporting Micro and Small
Enterprises (MSEs) in Tanzania. The study examines key factors such as the duration of MFI
operations, the types of clients they serve, loan portfolio distribution, default rates, and challenges
in accessing capital. Additionally, the research explores risk management strategies, regulatory
challenges, financial products offered, and opportunities for enhancing MFI support for MSEs.
1.1 Specific Research Objectives
Assess the current landscape of MFIs in Tanzania, including their longevity and market reach.
Identify the major challenges MFIs face in financing and supporting MSEs.
Explore risk management techniques used by MFIs when lending to MSEs.
Evaluate the regulatory environment and its impact on MFI operations.
Recommend policy and operational strategies to strengthen MFI contributions to economic development.
🏦
1.2 Why MFIs Matter for Tanzania's MSEs
Microfinance Institutions play a crucial role in promoting financial inclusion and economic
development in Tanzania. With traditional banks often hesitant to serve small businesses due to
perceived risks, MFIs bridge the gap by providing accessible financial services to micro and
small enterprises. According to the Tanzania National Bureau of Statistics (NBS, 2022),
MSEs account for over 35% of Tanzania's GDP and provide employment to more than
5 million people.
35%+
MSE Contribution to GDP
5M+
People Employed by MSEs
Services Offered by MFIs to MSEs
💳 Micro-loans & Credit
Helping businesses expand and sustain operations through accessible, collateral-light credit facilities.
📚 Financial Literacy Training
Ensuring MSEs understand budgeting, loan management, and business planning fundamentals.
💰 Savings & Investment Products
Enabling small businesses to build financial resilience and invest in growth.
📱 Digital Financial Services
Mobile banking and digital payments to improve financial accessibility and reduce transaction costs.
⚖️
1.3 Key Challenges & Opportunities
Top Challenges Facing MFIs
Share of MFIs citing each challenge as a primary obstacle
This research utilised a quantitative survey approach to gather data on the
operations, challenges, and opportunities faced by MFIs in Tanzania. Data was collected
from November 2024 to January 2025, combining structured questionnaires with
key informant interviews and secondary data from NBS, Bank of Tanzania (BoT), and TAMFI.
📋
Structured Surveys
Standardised questionnaires on MFI operations, loan portfolios, risk strategies and regulatory challenges.
🗣️
Key Informant Interviews
In-depth interviews with MFI managers and industry experts across Tanzania.
📰
Secondary Data Review
Reports from NBS (2022), Bank of Tanzania (2024), and TAMFI (2023) to contextualise findings.
🌍
Geographic Coverage
Dar es Salaam, Mwanza, Arusha, Dodoma, Mbeya, and Zanzibar — urban, peri-urban, and rural.
2.2 Sample Size & Distribution
MFI Sample by Years in Operation
420 MFIs surveyed — distributed by operational maturity
Sample by Client Type
Distribution of MFIs by primary client category
Category
MFI Count
Share (%)
Distribution
1 – 5 Years Operation
230
55%
55%
6 – 10 Years Operation
80
19%
19%
Less than 1 Year
90
21%
21%
Over 10 Years
20
5%
5%
Serves Micro-enterprises primarily
37%
37%
Mixed Client Base (Micro + Small)
39%
39%
Serves Small Enterprises
24%
24%
2.3 Study Limitations
🔍 Self-Reported Data
Survey responses may include bias. Secondary data from NBS, BoT and TAMFI used for validation.
🌱 Informal MFIs Excluded
Community savings groups and village lending schemes not fully included; findings apply to registered MFIs.
🏙️ Urban Bias
Higher participation from urban MFIs; unique rural challenges may not be fully captured.
📐 MSE Perspective Gap
Study focuses on MFIs; MSE client perspectives on service quality not extensively covered.
Findings & Analysis
📅
3.1 Years of Operation of MFIs
A majority of MFIs in Tanzania are relatively young, with over 76% (320 MFIs)
having operated for 10 years or less. The largest category (55%) has been operating for 1–5 years,
indicating rapid sector growth. Only 5% have been in existence for more than
10 years, highlighting that long-term sustainability remains a challenge.
5%
MFIs Operating 10+ Years
55%
MFIs in Operation 1–5 Years
21%
MFIs Under 1 Year Old
19%
MFIs Operating 6–10 Years
MFI Sector Maturity Profile — Years in Operation
Distribution of 420 surveyed MFIs by operational age — indicates a young, rapidly expanding sector
3.1.2 Implications of MFI Experience
Dimension
Established MFIs (10+ yrs)
Young MFIs (<5 yrs)
Trend
Loan Default Rate
Below 5%
Up to 15%
▼ Higher Risk for Young MFIs
Investor Confidence
High — proven track record
Low — unproven viability
▲ Improves with age
Operational Costs
Lower — economies of scale
Higher — setup & hiring costs
▲ Decreases with experience
Regulatory Compliance
Resilient — adapted over time
Challenging — capital adequacy gaps
→ Policy support needed
Risk Assessment Quality
Strong frameworks
Underdeveloped
▼ Training gap critical
⚠️ Policy Implication: The dominance of young MFIs creates systemic risk. Targeted policies
— including subsidised risk management training, mentorship from established MFIs, and
access to affordable capital — are critical to improving sector sustainability.
👥
3.2 Type of Clients Served
Client segmentation directly influences lending strategies, risk management approaches, and
overall financial sustainability. The majority of MFIs (39%) serve a mixed client base covering
both micro and small enterprises, while 37% focus on micro-enterprises and 24% on small
enterprises exclusively.
Client Category
MFIs (Frequency)
Share (%)
Typical Loan Size
Risk Profile
Distribution
Micro-enterprises
150
37%
Small, short-term
High Risk
37%
Mixed (Micro & Small)
160
39%
Varied
Medium Risk
39%
Small enterprises
100
24%
Larger, longer-term
Lower Risk
24%
Total
410
100%
—
—
—
Client Segmentation Breakdown
Share of MFIs by primary client category (n = 410)
Interest Rate vs Client Type (Conceptual)
Higher micro-enterprise risk means higher interest rates; small enterprise lending is more cost-efficient
How Client Segmentation Shapes Lending Strategy
📏 Loan Size
Micro-enterprises: Smaller amounts, shorter repayment. Small enterprises: Larger loans, longer terms for equipment and expansion.
🛡️ Risk Management
Micro: Group lending & peer guarantees. Small: Individual lending with collateral requirements.
Micro: Group loans, micro-loans, literacy programs. Small: Working capital, asset financing, trade credit.
🚧
3.3 Challenges in Providing Loans to MSEs
Despite their significance, MFIs face multiple barriers that hinder their ability to extend
credit effectively. Research identified five major challenges in loan disbursement.
Main Barriers — MFIs in Providing Loans to MSEs
Frequency and percentage of each challenge across all surveyed MFIs (total response n = 1,220)
Challenge
Frequency
Share (%)
Key Impact
Priority
Insufficient Funds for Lending
300
25%
Leaves many MSEs unserved
CRITICAL
Lack of Collateral from Clients
290
24%
Forces higher rates, limits approval
CRITICAL
Limited Client Financial Literacy
270
22%
Leads to missed repayments
HIGH
High Operational Costs for Small Loans
210
17%
Reduces profitability & rural reach
HIGH
High Default Rates
150
12%
Stricter lending, higher interest rates
MEDIUM
Total
1,220
100%
—
—
🔑 Key Finding:
The top two barriers — insufficient lending funds (25%) and lack of collateral
(24%) — together account for nearly half of all challenges. Addressing these through
government-backed guarantee schemes and alternative collateral models would have the
greatest impact on financial inclusion.
🛡️
3.4 Risk Management Strategies
Given the high-risk nature of lending to MSEs, MFIs implement various risk mitigation strategies.
The most widely used is credit risk assessment and scoring (26%), followed by
group lending and social collateral (23%).
Risk Mitigation Strategy Usage
Share of MFIs using each risk management approach (n = 1,080 responses)
Effectiveness vs Adoption Rate
Comparing how widely adopted each strategy is against its perceived effectiveness
Risk Strategy
Frequency
Share (%)
How It Works
Key Limitation
Trend
Credit Risk Assessment & Scoring
280
26%
Creditworthiness based on financial history & repayment behaviour
Limited MSE financial records
▲ Growing
Group Lending & Social Collateral
250
23%
Peer-guarantee groups share loan responsibility
Group conflicts can weaken model
→ Established
Strict Loan Monitoring & Follow-ups
200
19%
Regular visits & digital tracking of repayments
Raises operational costs for rural
▲ Digital shift
Loan Portfolio Diversification
180
17%
Spread exposure across sectors & geographies
Requires strong financial expertise
▲ Growing
Credit Guarantee Schemes
170
15%
Government / donor partial risk coverage
Bureaucratic delays, access issues
▲ Needed more
Total
1,080
100%
—
—
—
✅ Best Practice: The most effective approach for MFIs combines multiple strategies simultaneously —
particularly integrating alternative data sources (e.g. mobile money transaction histories)
into credit scoring models alongside group lending mechanisms.
📊
3.5 Loan Portfolio Allocation to MSEs
MFIs allocate their loan portfolios based on sectoral demand, risk assessment, and expected
returns. The total MSE loan portfolio across surveyed MFIs stands at TZS 800 billion,
with Trade & Retail taking the largest share at 30%.
TZS 250B
Trade & Retail — 30%
TZS 180B
Agriculture — 22%
TZS 150B
Manufacturing — 18%
TZS 120B
Services / ICT — 14%
TZS 100B
Construction — 12%
Loan Portfolio by Sector (TZS Billions)
Absolute value allocation across five economic sectors — TZS 800B total
Loan Size Distribution Among MSEs
62% of all loans fall below TZS 5 million — confirming micro-enterprise orientation
Business Sector
Allocation (TZS Bn)
Share (%)
Growth Driver
Trend
Trade & Retail
250
30%
Dominance of small trading businesses
→ Dominant
Agriculture & Agribusiness
180
22%
Government food security policy support
▲ Growing
Manufacturing & Processing
150
18%
Industrialisation & value-addition drive
▲ Rising
Services (Transport, ICT)
120
14%
Digital economy expansion
▲ Rising
Construction & Real Estate
100
12%
Urbanisation & infrastructure demand
→ Stable
TOTAL
800
100%
—
—
3.5.2 Loan Size Distribution
Loan Size (TZS)
Number of Loans
Share (%)
Typical Borrower
Distribution
< 2 Million
5,000
32%
Street vendors, market traders
32%
2 – 5 Million
4,500
30%
Small shop owners, small farmers
30%
5 – 10 Million
3,000
20%
Growing businesses, agribusiness
20%
10 – 20 Million
1,500
10%
Small enterprises, manufacturers
10%
> 20 Million
1,000
8%
Established SMEs, construction
8%
TOTAL
15,000
100%
—
—
📌 Key Trends in Loan Allocation:
1. Digital Lending is Rising: Mobile-based microloans are expanding through fintech partnerships with telecom companies — faster processing & repayment tracking.
2. Women-Owned Business Focus: Growing allocation to women-led businesses, reflecting inclusive finance policies.
3. Manufacturing on the Rise: Growing industrial loan share aligns with Tanzania's industrialisation goals.
Findings & Analysis: MFI Contributions to SME Development in Tanzania 2025 | TICGL Research
Deep-dive into the data from 420 MFIs in Tanzania — loan portfolios, default rates, risk management, regulatory environment, digital integration, training programs, and strategic recommendations.
The duration of operation is a key proxy for stability and financial sustainability. Most MFIs in Tanzania are relatively young, with more than three-quarters having operated for 10 years or less — signalling a rapidly expanding but still maturing sector.
55%
Operate 1–5 years
21%
Less than 1 year
19%
6–10 years
5%
Over 10 years
Distribution
MFI Age Profile (n=420)
Trend Analysis
Sectoral Impact by Operational Age
Years in Operation
No. of MFIs
Share
Distribution
Less than 1 year
90
21%
1–5 years
230
55%
6–10 years
80
19%
Over 10 years
20
5%
Total
420
100%
The prevalence of young MFIs (76% operating ≤ 10 years) reflects Tanzania's rapidly expanding microfinance market. However, only 5% have survived more than a decade, underscoring long-term sustainability as a sector-wide challenge that requires targeted policy support.
📈
Access to Capital
MFIs with longer track records attract stronger investor confidence and better financing terms. Newer MFIs often struggle to access funding before proving financial viability.
⚙️
Operational Efficiency
Experienced MFIs benefit from economies of scale and streamlined lending processes. Newer entrants face higher administrative costs as they build client trust.
🏛️
Regulatory Resilience
MFIs that have survived over 10 years have demonstrated adaptability to regulatory changes — a key indicator of institutional health and long-term sustainability.
Section 3.2
Type of Clients Served
Client segmentation directly shapes an MFI's lending strategy, risk exposure, and financial product portfolio. The near-equal distribution across client types highlights the diversity of Tanzania's MFI landscape.
Client Segmentation
MFIs by Primary Client Category
Influence on Strategy
Lending Strategy by Client Type
Client Category
Frequency
Percentage
Distribution
Micro-enterprises
150
37%
Mixed (Micro & Small)
160
39%
Small enterprises
100
24%
Total
410
100%
How Client Segmentation Influences Lending Strategies
🏪
Micro-Enterprise Focus (37%)
Higher risk profiles driven by irregular income and low financial literacy. MFIs use group lending and peer guarantee models to minimize defaults, and charge higher interest rates to offset costs.
🏢
Small Enterprise Focus (24%)
Better creditworthiness enables individual lending with collateral requirements. MFIs can offer lower interest rates as larger loans reduce per-unit administrative costs.
🔀
Mixed-Client Focus (39%)
The largest segment combines micro-loans, SME loans, working capital facilities and trade credit — diversifying both the product range and risk exposure of the institution.
Section 3.3
Challenges in Providing Loans to MSEs
MFIs face five key barriers that reduce their capacity to extend credit. Insufficient lending funds and lack of borrower collateral emerge as the dominant constraints, together accounting for nearly half of all reported challenges.
25%
Insufficient Funds
24%
Lack of Collateral
22%
Low Financial Literacy
17%
High Operational Costs
12%
High Default Rates
Key Lending Barriers
Main Challenges MFIs Face in Providing Loans to MSEs (n=1,220 responses)
Challenge
Frequency
Percentage
Distribution
Key Impact
Insufficient funds for lending
300
25%
Limits credit supply; many MSEs left unserved
Lack of collateral from clients
290
24%
Blocks informal and women-led businesses
Limited client financial literacy
270
22%
Increases default and misuse of funds
High operational costs for small loans
210
17%
Reduces rural outreach; drives up interest rates
High default rates
150
12%
Strains liquidity and limits new disbursements
Total
1,220
100%
⚠️ Critical finding: The top two barriers — insufficient funds (25%) and lack of collateral (24%) — together explain why many creditworthy MSEs remain financially excluded. Addressing these requires systemic policy intervention, not just institutional adjustment.
Section 3.4
Risk Management Strategies
Given the high-risk profile of MSE lending, MFIs deploy a combination of strategies to manage credit risk. Credit scoring and group lending dominate, collectively accounting for nearly half of all reported approaches.
Strategy Prevalence
Risk Management Strategies Used by MFIs
Effectiveness Radar
Strategy Effectiveness vs Coverage
Risk Management Strategy
Frequency
Percentage
Distribution
Credit risk assessment and scoring
280
26%
Group lending and social collateral
250
23%
Strict loan monitoring and follow-ups
200
19%
Loan portfolio diversification
180
17%
Credit guarantee schemes
170
15%
Total
1,080
100%
Best practice: MFIs with the lowest default rates consistently apply a combination of credit scoring, group lending, and strict monitoring — rather than relying on a single approach. A multi-strategy framework is the most effective risk mitigation model.
Section 3.5
Loan Portfolio Allocation to MSEs
With a total MFI loan portfolio of TZS 800 billion, trade and agriculture dominate allocations, reflecting Tanzania's economic structure. A shift toward manufacturing and digital lending is also underway.
TZS 800B
Total Loan Portfolio
30%
Trade & Retail
62%
Loans Below TZS 5M
32%
Loans Below TZS 2M
Sectoral Distribution
Loan Portfolio by Business Sector (TZS Billion)
Loan Size Distribution
MSE Loan Size Breakdown (n=15,000 loans)
Table 3.4: Loan Portfolio Allocation by Business Sector
Business Sector
Loan Allocation (TZS Billion)
Percentage
Distribution
Trade & Retail
250
30%
Agriculture & Agribusiness
180
22%
Manufacturing & Processing
150
18%
Services (Transport, ICT)
120
14%
Construction & Real Estate
100
12%
Total
800
100%
Table 3.5: Loan Size Distribution Among MSEs
Loan Size (TZS)
Number of Loans
Percentage
Distribution
< 2 Million
5,000
32%
2 – 5 Million
4,500
30%
5 – 10 Million
3,000
20%
10 – 20 Million
1,500
10%
> 20 Million
1,000
8%
Total
15,000
100%
Section 3.6
Default Rates for MSE Loans
Loan repayment performance varies significantly across MFIs, with the majority reporting moderate default rates. However, a substantial minority — more than one in four — face defaults above 10%, posing serious sustainability risks.
24%
Default < 5%
49%
Default 5–10%
27%
Default > 10%
Default Rate Distribution
MFI Default Rate Bands (n=420)
Causes of Default
Primary Drivers of MSE Loan Defaults
Key Causes of Default Among MSE Borrowers
1
Poor Financial Management
MSEs frequently mix personal and business finances, struggle with cash flow planning, and lack structured financial records — making meeting repayment deadlines difficult.
2
Limited Financial Literacy
Many borrowers misunderstand loan terms, interest rate structures, and penalty clauses — leading to unintentional defaults and disputes with MFIs.
3
Economic & Market Fluctuations
Seasonal revenue disruptions, supply chain volatility, and price shocks reduce business income below repayment thresholds — especially in agriculture and trade.
4
High Interest Rates
MFIs charge premium rates to compensate for operational costs and risk exposure. For thin-margin MSEs, cumulative interest obligations often exceed cash flow capacity.
5
Inadequate Risk Assessment
Incomplete financial histories, lack of collateral documentation, and limited credit scoring tools result in loans being extended to clients with insufficient repayment capacity.
6
External & Regulatory Barriers
Delayed payments from clients and government contracts, combined with licensing costs and tax burdens, compress disposable income available for loan repayment.
⚠️ 27% of MFIs face default rates above 10% — a threshold that strains liquidity, limits new loan disbursements, and reduces investor confidence. Without intervention, this segment risks institutional collapse.
Section 3.7
Challenges in Accessing Capital
Securing adequate funding is a persistent structural problem for Tanzanian MFIs. High borrowing costs and regulatory constraints are the dominant barriers, limiting the sector's ability to expand lending and reduce interest rates for MSE clients.
44%
Cite High Borrowing Costs
29%
Stringent Collateral Requirements
Capital Access Barriers
Key Challenges MFIs Face in Securing Funds
Role of Regulatory Policies in Financing Accessibility
📋
Licensing & Compliance Costs
Capital adequacy and reporting standards increase operating costs. Smaller MFIs often struggle to meet requirements, reducing their eligibility for external funding.
📊
Interest Rate Caps
Imposed caps limit MFI profitability and exclude high-risk borrowers, as MFIs cannot compensate for lending risks through flexible pricing.
🌍
Foreign Investment Restrictions
International investors face lengthy regulatory approvals. Delays discourage capital inflows that could significantly expand MFI lending capacity.
🏦
Central Bank Policies
Limited access to central bank refinancing forces costly commercial bank borrowing. Tight liquidity controls restrict expansion in underserved regions.
Section 3.8
Preferred Financing Options
MFIs rely on a mix of debt, equity, grants and retained earnings to fund their lending operations. Commercial bank loans dominate despite their high cost — reflecting limited availability of alternative financing.
Financing Mix
Preferred Financing Sources (n=430 MFIs)
Cost vs. Availability
Financing Source Trade-offs
Financing Option
Frequency
Percentage
Key Advantages
Commercial Bank Loans
160
40%
Readily available; consistently accessible but expensive due to high interest rates
Government & Donor Grants
120
30%
Low-cost funding; highly preferred but with inconsistent availability
Most sustainable source; but limited by operational profitability levels
Total
430
100%
Section 3.9 – 3.11
Regulatory Environment for MFIs
Tanzania's regulatory framework receives mixed reviews from MFIs. While a majority view it as broadly supportive, significant policy bottlenecks — particularly around interest rate flexibility and compliance burdens — constrain institutional growth.
Perceptions Survey
MFIs' View of Tanzania's Regulatory Landscape (n=420)
Key Bottlenecks
Regulatory Challenges Faced by MFIs
Table 3.9: MFI Perceptions of Regulatory Environment
Increases administrative burden and operational costs
High compliance costs
130
20%
Reduces funds available for lending, especially for small MFIs
Strict licensing & registration
120
19%
Limits new market entrants; slows sector innovation
Total
640
100%
Recommended Regulatory Reforms (Table 3.11)
Regulatory Change
Frequency
Percentage
Expected Impact
More flexible lending guidelines
300
39%
Expands financial access for underserved MSEs; improves approval rates
Government-backed guarantees for MSE loans
240
31%
Reduces lending risks; enables more loans to MSEs with limited collateral
Streamlined reporting requirements
120
16%
Frees resources for service delivery; reduces administrative costs
Reduction in compliance costs
110
14%
Lowers barriers for smaller MFIs; promotes inclusive market growth
Total
770
100%
Sections 3.12 – 3.14
Financial Products & Service Gaps
Tanzania's MFIs are primarily loan-focused, with micro-loans and group loans accounting for 97% of all financial products. Critical non-lending services — savings accounts, insurance, and mobile banking — remain severely underdeveloped relative to MSE demand.
Products Offered
Financial Products Currently Offered by MFIs
Services Requested
Most Requested Financial Services by MSEs
Demand vs. Supply Gap Analysis (Table 3.13)
Financial Service
MSE Demand (%)
MFI Supply (%)
Gap
Assessment
Small Business Loans
60%
55%
Mostly Met More flexible products needed
Financial Literacy Training
21%
2%
Critical Gap MFIs must integrate structured programs
Key Barriers to Expanding Financial Products (Table 3.14)
Barrier
Frequency
Percentage
Core Impact
High development & operational costs
230
31%
Prevents introduction of new products due to high administrative and tech expenses
Regulatory restrictions
230
31%
Capital requirements and licensing limit savings, insurance and fintech services
Lack of technical expertise
210
28%
Skill gaps in risk assessment, digital finance and product innovation
Limited client demand
70
9%
Low awareness and financial literacy reduce uptake of non-lending products
Total
740
100%
Section 3.15
Barriers to Digital Financial Integration
Digital financial services (DFS) hold transformative potential for Tanzania's MFI sector. However, infrastructure costs, security concerns and low digital literacy among clients are slowing the pace of adoption.
Digital Barriers
Primary Barriers to Digital Financial Integration (n=740 responses)
Barrier
Frequency
Percentage
Impact on Digital Integration
High costs of digital infrastructure
250
34%
Fintech platforms, mobile apps and cloud systems remain unaffordable for smaller MFIs
Data privacy & security concerns
200
27%
Cyber threats and weak data protection frameworks deter MSE adoption
Low digital literacy among clients
200
27%
Despite availability, MSEs lack skills to use mobile banking or digital loan tools
Regulatory barriers
82
11%
Strict licensing and KYC requirements slow digital onboarding
Total
740+
100%
🔒
Security & Trust Solution
Strengthen cybersecurity frameworks, enforce data protection laws, and launch client education programs on digital safety and fraud prevention.
💡
Infrastructure Cost Reduction
Partner with fintech firms to share technology costs; leverage cloud-based solutions and seek government subsidies or donor grants for digital platform adoption.
📱
Digital Literacy Programs
Launch targeted digital finance training for MSEs; develop simplified, user-friendly mobile banking apps with local language support and intuitive interfaces.
📜
Regulatory Sandbox
Advocate for streamlined compliance for digital MFIs; work with policymakers to create regulatory sandboxes that allow controlled testing of new digital financial services.
Sections 3.16 – 3.18
Training, Support & Loan Management Challenges
Financial literacy and business training are not luxuries — they are structural components of a sustainable MFI ecosystem. Yet gaps in delivery, reach and content quality remain significant obstacles.
Training Availability
MFIs with Training Programs
Training Types
Types of Training Offered by MFIs
Loan Management Challenges
MSE Difficulties in Managing Loans
Table 3.16: Training Program Availability
Training Status
Frequency
Percentage
Implications
Training programs already in place
290
73%
Majority of MFIs have active programs for financial literacy and business skills
Planning to introduce programs
90
23%
These MFIs recognise the need but lack implementation frameworks
No training programs offered
20
5%
Focus solely on financial services without capacity-building support
Total
400
96% offer or plan to offer training
Table 3.17: Types of Training Offered
Training Type
Frequency
Percentage
Impact on MSEs
Financial literacy & budgeting
280
35%
Teaches cash flow management, expense tracking, and sustainable fund allocation
Loan management & repayment
200
25%
Reduces defaults by improving understanding of repayment obligations and terms
Business planning & management
200
25%
Helps entrepreneurs develop strategic plans and make better investment decisions
Digital literacy
120
15%
Enables transition to mobile banking, digital payments and online loan management
Total
800
100%
Table 3.18: Challenges MSEs Face in Loan Management
Challenge
Frequency
Percentage
Impact on Repayment
Limited financial literacy
330
35%
Affects budgeting, planning and ability to track loan obligations
Poor cash flow management
330
35%
Results in irregular repayments and difficulty covering business expenses
Difficulty understanding loan terms
190
20%
Confusion over schedules, rates and penalties leads to unintentional defaults
Low digital skills
90
10%
Limits access to digital loan management tools and mobile repayment options
Total
940
100%
Section 3.19
Opportunities for Strengthening MFI Support
MFIs themselves identify four key pathways to enhance their impact on MSE development — government-backed funding, digital transformation, strategic partnerships, and expanded financial literacy programs.
Opportunity Landscape
Opportunities to Improve MFI Support for MSEs in Tanzania (n=1,140)
Opportunity
Frequency
Percentage
Expected Impact
Access to government-backed funding programs
320
28%
Provides MFIs with low-cost capital to expand lending to underserved MSEs
Expanding digital financial services
290
25%
Lowers transaction costs; improves accessibility for rural and informal MSEs
Forming partnerships with fintech providers
310
27%
Enables AI credit scoring, blockchain lending, and advanced risk management
Expanding financial literacy programs
220
19%
Reduces default rates; improves loan utilisation and business outcomes for MSEs
Total
1,140
100%
Section 4
Conclusion & Policy Recommendations
This study establishes that MFIs are critical but structurally constrained drivers of MSE development in Tanzania. Sustainable growth requires a coordinated response across three levels: institutional reform within MFIs, enabling regulatory changes, and broader stakeholder collaboration.
4.1 Summary of Key Findings
📋
Risk Management
A combination of credit scoring, group lending, portfolio diversification, and credit guarantee schemes are most effective in mitigating default risks.
💰
Loan Portfolio
Trade & retail (30%) and agriculture (22%) dominate allocations. Manufacturing and digital lending are growing in share.
🏦
Capital Access
44% cite high borrowing costs; 29% face stringent collateral requirements — both major barriers to expanding affordable lending services.
📜
Regulatory Constraints
Capital adequacy requirements, compliance costs, and interest rate caps limit operational flexibility and restrict financial innovation.
📚
Financial Literacy Gaps
MSE borrowers struggle with loan terms, cash flow management and digital tools — directly increasing default risks and loan misuse.
4.2 Recommendations for MFIs
For MFIs
Strengthen Credit Assessment
Integrate mobile money transaction histories as alternative credit data
Use AI-powered scoring to assess informal MSEs
Conduct rigorous pre-loan screening to improve repayment outcomes
For MFIs
Expand Financial Literacy
Offer mandatory budgeting and repayment workshops prior to loan disbursement
Develop simplified, jargon-free loan agreements
Provide post-disbursement advisory services to at-risk borrowers
For MFIs
Embrace Digital Transformation
Partner with telecoms to enable mobile-based loans and repayments
Invest in user-friendly digital platforms for underserved MSEs
Implement cloud-based systems to reduce operational overhead
4.2 Recommendations for Regulators
For Regulators
Flexible Interest Rate Policies
Implement risk-based pricing to allow MFIs to adjust rates by borrower profile
Encourage blended finance models with public-private subsidies
Review interest rate caps to reflect operational realities of MSE lending
For Regulators
Tiered Compliance Framework
Introduce differentiated requirements based on MFI size and risk exposure
Reduce licensing fees and fast-track approvals for new institutions
Implement digital submission systems to reduce reporting burden
For Regulators
Digital Regulatory Sandbox
Create controlled testing environments for new digital financial products
Streamline KYC processes to ease digital onboarding for MSEs
Establish transparent consultation processes before policy changes
4.2 Recommendations for Other Stakeholders
For Partners & Development Institutions
Public-Private Partnerships
Strengthen collaboration between MFIs, banks, and development finance institutions
Promote government-backed credit guarantee schemes to reduce MFI lending risks
Support blended finance models that combine grants with commercial capital
For Partners & Development Institutions
Support Digital Infrastructure
Invest in mobile banking infrastructure for underserved rural regions
Encourage fintech innovation through funding incentives and sandboxes
Develop shared platforms to reduce per-MFI digital investment costs
For Partners & Development Institutions
Strengthen MSE Capacity
Fund national financial literacy campaigns targeting MSE owners
Support women-led and youth-owned enterprises through targeted credit lines
Develop business incubator programs linked to microfinance access
✅ Way forward: By implementing these recommendations, Tanzania has the opportunity to build a more inclusive, efficient, and sustainable microfinance ecosystem — one where MFIs can serve as genuine growth engines for the country's 5 million+ MSE employees and the broader TZS economy.
AB
Amran Bhuzohera
Senior Economist & Research Lead, TICGL
Research areas include public-private partnerships, SME development, inclusive banking, and microfinance policy in Tanzania. Managing Director of Tanzania Investment and Consultant Group Ltd. Contact: amran@ticgl.com | +255 768 699 002
References
Bibliography
Bank of Tanzania. (2024). Microfinance Sector Performance Report. Bank of Tanzania.
National Bureau of Statistics Tanzania. (2022). Micro, Small, and Medium Enterprises Survey Report.
Kessy, S., & Urassa, G. (2020). The role of microfinance institutions in supporting small businesses in Tanzania. Journal of African Finance, 18(2), 45–62.
Nyamsogoro, G. (2017). Financial sustainability of rural microfinance institutions in Tanzania. African Journal of Economic Policy, 25(3), 78–91.
Tanzania Association of Microfinance Institutions (TAMFI). (2023). Annual Report on Microfinance Institutions in Tanzania.
Ministry of Finance and Planning. (2023). Microfinance Policy and Financial Inclusion Strategy in Tanzania.
GSMA. (2022). Mobile Money Adoption in Tanzania: Trends and Future Growth.
World Bank. (2023). Financial Inclusion and Digital Transformation in Sub-Saharan Africa.
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