Tanzania Government Domestic Debt by Creditor Category 2026 | TICGL Economic Research
TICGL Economic Research · March 2026
Tanzania Government Domestic Debt by Creditor Category
A comprehensive analysis of Tanzania's domestic debt structure as of January–March 2026,
covering creditor distribution, instruments, debt servicing and economic implications —
sourced from the Bank of Tanzania.
Updated: March 2026
Source: Bank of Tanzania (BoT)
~10 min read
TZS 38,599.6B
Total Domestic Debt (Jan 2026)
+183%
Growth since 2018
56.3%
Banks + Pension Funds Share
80.4%
Long-term Treasury Bonds
TZS 669.8B
Debt Serviced in Jan 2026
1
Overview of Tanzania's Domestic Debt
Tanzania's domestic debt stock reached TZS 38,599.6 billion at the end of
January 2026, up 1.9% from TZS 37,899.0 billion in December 2025 —
reflecting a long-term upward trend driven by increased issuance of government securities
to finance budget deficits and development projects.
This growth has nearly tripled since 2018 (TZS 13,618.8 billion),
highlighting the expanding role of the domestic securities market in Tanzania's fiscal
operations. The debt is predominantly long-term (80.4% Treasury bonds),
with major holders being commercial banks (28.5–29%) and pension funds (27.1–27.3%),
together holding over 55% — indicating strong institutional participation.
Government securities auctions have shown strong investor confidence, with oversubscribed
results — for example, a 34% oversubscription rate for 10-year bonds at
11.30% yield in January — enabling low-cost borrowing. In January 2026 alone, the
government mobilised TZS 263.7 billion via securities issuances.
Macroeconomic Context: Domestic debt growth aligns with stable
macroeconomic conditions — 3.2% inflation and a 5.75% Central Bank Rate (CBR) —
supporting 6.0–6.3% GDP growth projections for 2026, driven by sectors like mining
and agriculture.
TZS 38,599.6B
Domestic Debt Stock
As of January 2026; up from TZS 13,618.8B in 2018
+1.9%
Monthly Growth
Dec 2025 → Jan 2026
~17% GDP
Debt-to-GDP Ratio
Domestic share is ~30% of total public debt
TZS 669.8B
Jan 2026 Servicing Cost
Principal + Interest payments in January 2026
2
Government Domestic Debt by Creditor Category (January 2026)
The table below shows the main institutions that hold government domestic debt
as of January 2026. Commercial banks lead as the largest single creditor group, followed
closely by pension funds.
Share of total domestic debt by creditor type (TZS Billion)
Domestic Debt Held by Creditor — Amount (TZS Billion)
January 2026 — absolute values by creditor category
3
Year-on-Year Comparison: January 2025 vs January 2026
Comparing January 2025 to January 2026 reveals clear
shifts in the creditor landscape. While commercial banks and pension funds both grew in
absolute terms, the Bank of Tanzania reduced its holdings by TZS 417.1
billion, reflecting a deliberate shift away from central bank financing.
Creditor Category
Jan 2025 (TZS B)
Share 2025
Jan 2026 (TZS B)
Share 2026
Change (TZS B)
Share Change
Commercial Banks
9,816.6
28.7%
10,979.6
29.0%
+1,163.0
+0.3%
Pension Funds
9,094.6
26.6%
10,352.2
27.3%
+1,257.6
+0.7%
Bank of Tanzania
7,112.3
20.8%
6,695.2
17.7%
−417.1
−3.1%
Insurance Companies
1,872.6
5.5%
2,006.1
5.3%
+133.5
−0.2%
BOT Special Funds
476.1
1.4%
737.8
1.9%
+261.7
+0.5%
Others
5,782.6
16.9%
7,128.0
18.8%
+1,345.4
+1.9%
Total
34,154.9
100%
38,599.6
100%
+4,444.7
—
Year-on-Year Comparison by Creditor (TZS Billion)
January 2025 vs January 2026
Notable Shift: The Bank of Tanzania's share declined from 20.8% to 17.7%
(−3.1 percentage points), while "Others" grew from 16.9% to 18.8% (+1.9 pp), indicating
broader participation in the government securities market including from individuals and
private institutions.
4
Distribution Among Major Creditor Groups
Two creditor groups — commercial banks and pension funds — together hold
an outsized majority of Tanzania's domestic debt. This concentration reflects the investment
mandates of these institutions, both of which seek low-risk, interest-bearing assets.
Major Creditor
Amount (TZS Billion)
Share (%)
Combined
Commercial Banks
10,979.6
29.0%
≈ 56%
Pension Funds
10,352.2
27.3%
Bank of Tanzania
6,695.2
17.7%
—
Others
7,128.0
18.8%
—
Insurance Companies + BOT Special Funds
2,743.9
7.2%
—
Commercial banks and pension funds together hold over half of Tanzania's
domestic debt — approximately TZS 21.3 trillion out of TZS 38.6 trillion,
demonstrating the critical role of the formal financial sector in government financing.
5
Role of Each Creditor Category
Each creditor category participates in the government securities market for distinct
reasons rooted in their institutional mandates, risk profiles and liquidity requirements.
Understanding these roles is key to assessing the stability and depth of Tanzania's
domestic debt market.
🏦
Commercial Banks
29.0% Share
Largest holders of government securities, primarily investing in short-to-medium
term instruments as part of liquidity and capital management strategies.
Treasury Bonds (primary investment)
Treasury Bills (liquidity management)
Low-risk, liquid assets on balance sheet
Regulatory compliance with liquidity ratios
🏛️
Pension Funds
27.3% Share
Major long-term investors including NSSF, PSSSF and LAPF — they seek stable
returns aligned with long-dated pension liabilities.
Long-term Treasury Bonds (5–25 years)
Stable, predictable coupon income
Asset-liability matching for pension obligations
NSSF, PSSSF, LAPF as key institutions
🏧
Bank of Tanzania (Central Bank)
17.7% Share
Holds government debt as part of its monetary policy toolkit and balance sheet
management — declining share signals reduced monetisation.
Monetary policy operations
Liquidity management tools
Open market operations (OMO)
Declining share (20.8% → 17.7%): positive signal
🛡️
Insurance Companies
5.3% Share
Invest part of their reserves in government securities to meet regulatory
requirements and provide predictable returns on policyholder funds.
Government Bonds and Treasury Bills
Stable returns with low default risk
Regulatory reserve requirements
Growing slowly (+TZS 133.5B YoY)
💼
BOT Special Funds
1.9% Share
Funds managed by the Bank of Tanzania for specific programs or government
financing arrangements — fastest growing category in 2025/26.
Special government financing programs
Managed by Bank of Tanzania
Fastest growth rate (+54.9% YoY)
From TZS 476.1B → TZS 737.8B
🌐
Others (Institutions, Individuals)
18.8% Share
A diverse group representing the breadth of Tanzania's securities market
participation — the second-fastest growing category by absolute amount.
Public institutions and agencies
Private companies and corporates
Individual retail investors
Non-resident investors (foreign)
6
Domestic Debt Growth Trend (2018 – January 2026)
Tanzania's domestic debt has grown consistently and substantially over
the past eight years, nearly tripling between 2018 and January 2026. This expansion
reflects the deliberate policy of relying more on domestic financing and deepening
the government securities market.
Year / Period
Domestic Debt Stock (TZS Billion)
Annual / Period Growth (%)
Cumulative Growth since 2018
2018
13,618.8
—
Base Year
2020
14,637.8
+7.5%
+7.5%
2022
21,256.1
+45.2%
+56.1%
2023
26,494.6
+24.6%
+94.5%
2024
31,002.6
+17.0%
+127.6%
2025 (End of Year)
37,899.0
+22.2%
+178.3%
January 2026
38,599.6
+1.9% (from Dec 2025)
+183.4%
Tanzania Domestic Debt Growth Trend (2018–Jan 2026)
Government domestic debt stock in TZS Billion — with trend line
Annual Growth Rate of Domestic Debt (%)
Period-over-period percentage change in total domestic debt stock
Key Insight: The steepest acceleration in domestic debt growth occurred
between 2020 and 2022 (+45.2%), driven by post-COVID fiscal expansion and increased
government development spending. Growth has remained elevated at 17–22% annually through
2024 and 2025.
7
Domestic Debt by Instrument (January 2026)
The composition of Tanzania's domestic debt by instrument reveals a clear preference for
long-term Government Bonds, which make up over 80% of the total. This
structure aligns with Tanzania's development financing needs and reduces refinancing risk.
Instrument
Amount (TZS Billion, Jan 2026)
Share (%)
Characteristics
Government Bonds (Treasury Bonds)
31,015.1
80.4%
Long-term; maturities 2–25 years
Treasury Bills
1,821.4
4.7%
Short-term; 35–364 days
Non-Securitized Debt (incl. Overdraft)
5,627.3
14.6%
Direct financing; not market-based
Government Stocks
135.7
0.4%
Legacy instruments; declining
Total Securities (Bonds + T-Bills + Stocks)
32,972.3
85.4%
Market-traded instruments
Debt Composition by Instrument — January 2026
Share of total domestic debt (TZS 38,599.6 billion)
85.4% of domestic debt is market-based securities (bonds, bills and
stocks), indicating a mature securities market. The high share of long-term bonds
reduces rollover risk and supports stable debt management.
8
Domestic Debt Servicing — January 2026
In January 2026, the government serviced a total of TZS 669.8 billion
in domestic debt obligations — comprising both principal repayments and interest payments.
Interest payments exceeded principal repayments, underscoring the cost of maintaining a
large and growing debt stock.
Servicing Item
Amount (TZS Billion)
Share of Total Servicing
Principal Repayment
303.9
45.4%
Interest Payments
365.9
54.6%
Total Domestic Debt Servicing
669.8
100%
Domestic Debt Servicing Breakdown — January 2026
Principal vs Interest payments in TZS Billion
Servicing Risk Watch: Monthly servicing of TZS 669.8 billion represents
approximately 6.5% of the government budget. While currently manageable,
rising yields or further debt accumulation could put pressure on fiscal resources and
potentially crowd out social spending.
9
Economic Implications for Tanzania's Growth and Development
Tanzania's domestic debt, primarily channelled through the securities market, plays a
multifaceted role in the economy — enabling self-reliant financing for growth while
also posing risks that require careful management.
Implication Category
Positive Impact on Growth
Potential Risks
Link to Securities Market
Fiscal Financing
Mobilises TZS 263.7B/month for infrastructure; reduces FX risk (domestic = 30% of total debt)
Servicing TZS 669.8B/month diverts from social programs; risks poverty stagnation (~20% target 2030)
Funds Vision 2050 (energy/mining); creates jobs (160,000 in 2025); pension investments enhance social security
Inequality if urban-focused; high servicing strains rural agriculture (26% GDP)
Diverse holders (18.8% others) broaden participation; foster market maturity
10
Key Observations & Conclusion
Key Observations
🏅
Financial Institutions Dominate
Commercial banks and pension funds together hold more than half of domestic debt,
reflecting a deep and institutionally anchored securities market in Tanzania.
📈
Steady Debt Growth Supports Fiscal Needs
Domestic borrowing has grown at 17–22% annually since 2022, primarily used to
finance government budget deficits and development programs without excessive inflation.
🌱
Increasing Role of Institutional Investors
Pension funds and insurance companies are becoming major long-term investors
in government securities, contributing to market stability and depth.
⚖️
Declining Central Bank Monetisation
The Bank of Tanzania's share fell from 20.8% to 17.7%, a positive indicator
that government financing is shifting away from central bank money creation.
Conclusion
According to the Bank of Tanzania report, Tanzania's domestic debt structure
is characterised by:
Strong dominance of commercial banks and pension funds — together accounting for over 56% of total domestic debt
Heavy reliance on long-term government securities such as Treasury bonds (80.4% of total)
Gradual expansion of domestic borrowing to finance government operations, reaching TZS 38,599.6 billion as of January 2026
Robust market participation, with oversubscribed auctions and growing participation from the "Others" category
Domestic debt therefore plays an important role in supporting fiscal financing
while also developing Tanzania's financial markets. Overall, domestic debt's
structure via securities promotes resilient, self-financed growth, but balanced management
is key to avoid debt overhang. For the most current updates, monitor the Bank of Tanzania
monthly economic review.
Bottom Line: Tanzania's domestic debt is structurally sound — dominated
by long-term instruments, held by stable institutional investors, and aligned with
macroeconomic stability targets. The key policy challenge is to manage the pace of
growth to avoid crowding out private sector credit and keep servicing costs sustainable.
Data Sources & Attribution: This analysis is based on the Bank of Tanzania (BoT)
Monthly Economic Review, Government Securities Auction Reports, and related fiscal data for
January–March 2026. Published by
TICGL – Tanzania Investment and Consultant Group Ltd
.
For updates, monitor www.bot.go.tz.
Extended Analysis — Section 2
11
Government Securities Market Context
Tanzania's domestic debt is predominantly financed through a well-functioning
government securities market. Understanding how auctions are conducted,
what instruments are issued and how yields are priced is essential for interpreting
the debt structure data.
In January 2026, the government mobilised TZS 263.7 billion through
securities issuances. Auction results consistently show oversubscription, with total bids
reaching as high as TZS 840 billion against offered amounts — signalling
deep investor appetite and ample market liquidity.
January 2026 Auction Highlights
Instrument
Tenor
Yield / Rate
Oversubscription
Implication
10-Year Treasury Bond
10 years
11.30%
+34%
Strong long-term investor demand
Government Securities (aggregate)
Mixed
~11.30% avg
Oversubscribed
TZS 840B bids vs offer
Total Mobilised (Jan 2026)
—
—
✓ Successful
TZS 263.7 billion raised
Investor Confidence Signal: A 34% oversubscription on 10-year bonds at
11.30% yield is a strong vote of confidence. It indicates that Tanzania's securities
market offers attractive risk-adjusted returns relative to alternatives, enabling the
government to borrow at controlled and predictable costs.
Securities Market Size and Depth
~15% GDP
Securities Market Depth
Market capitalisation relative to GDP — a mark of growing maturity
85.4%
Market-Based Debt
Share of total domestic debt held in tradeable securities
TZS 263.7B
Jan 2026 Mobilisation
New funds raised via government securities in one month
TZS 976.4B
Reverse Repos Reduced
Liquidity management via monetary policy instruments
IBCM Rate and Monetary Policy Link
The Inter-Bank Cash Market (IBCM) rate of 6.68% — well below the
10-year bond yield of 11.30% — reflects the healthy spread between short-term liquidity
rates and long-term sovereign yields. This spread incentivises banks and funds to
extend duration and hold longer-dated bonds, supporting the government's
preference for long-term debt financing.
Key Interest Rates & Yields — January 2026
Comparison of central bank rate, interbank rate and bond yield (% per annum)
Role of Domestic vs External Debt
Tanzania's domestic borrowing constitutes approximately 30% of total public debt,
with the remainder being external obligations. This balance reduces currency risk —
domestic debt is denominated in Tanzanian shillings (TZS) — while keeping external
borrowing sustainable relative to foreign exchange reserves of USD 6.3 billion.
Debt Category
Approx. Share of Total Debt
Currency
Key Risk
Domestic Debt
~30%
TZS (local currency)
Crowding-out of private credit
External Debt
~70%
USD, EUR, CNY, etc.
FX rate and refinancing risk
Total Public Debt
100%
Mixed
Balanced portfolio approach needed
12
Investor Deep-Dive: Who Holds What and Why
Beyond headline shares, the motivations and behaviours of each major creditor group
shape Tanzania's debt market dynamics. This section examines the investment
logic, regulatory context and portfolio implications for each major holder.
Portfolio Allocation by Creditor (Visual Overview)
Commercial banks hold TZS 10,979.6 billion (29.0%) of domestic debt,
up from TZS 9,816.6 billion a year earlier (+11.8%). Banks allocate capital to
government securities for several structural reasons:
Reason for Holding
Instrument Preferred
Regulatory Basis
Statutory Liquidity Reserve (SLR) compliance
Treasury Bills (short-dated)
Bank of Tanzania prudential requirements
Risk-weighted asset optimisation (Basel III)
Government Bonds (0% risk weight)
Capital adequacy framework
Yield-seeking on surplus deposits
2–5 year Treasury Bonds
Asset-liability management (ALM)
Collateral for interbank borrowing
Treasury Bills & short bonds
IBCM repo market rules
Pension Funds — Fast-Growing Long-Term Holders
Tanzania's three major pension funds — NSSF, PSSSF and LAPF —
collectively hold TZS 10,352.2 billion (27.3%), the fastest-growing major creditor
by absolute increase (+TZS 1,257.6 billion year-on-year). Their investment mandate
requires matching long-duration liabilities with long-dated assets:
Fund
Type
Primary Instrument
Investment Horizon
NSSF (National Social Security Fund)
Private sector workers
10–25 year Treasury Bonds
20–30 years
PSSSF (Public Service Social Security Fund)
Public servants
Long-term Government Bonds
20–30 years
LAPF (Local Authorities Provident Fund)
Local government workers
Government Bonds & T-Bills
10–25 years
Combined (all pension funds)
—
Predominantly bonds
Long-term focus
Pension Fund Growth Driver: Tanzania's formal employment is expanding
as GDP grows at 6.0–6.3%, increasing NSSF/PSSSF/LAPF contributions. As assets under
management (AUM) grow, so does demand for long-dated government securities — creating
a self-reinforcing cycle of market development.
Year-on-Year Growth by Creditor Category (TZS Billion)
Absolute change between January 2025 and January 2026
The "Others" Category — Broadening Participation
The "Others" category — comprising public institutions, private companies, individuals
and non-resident investors — grew by TZS 1,345.4 billion (+23.3%),
making it the fastest-growing creditor by percentage among the non-fund categories.
Its share rose from 16.9% to 18.8%, reflecting:
Increased retail investor participation in Tanzania's
government securities primary market
Growing awareness of Treasury bonds as a
savings vehicle for individuals
Corporate treasury departments deploying surplus liquidity
into short-term T-Bills
Non-resident investors attracted by competitive yields
amid a stable TZS exchange rate
13
Data Reconciliation: BoT Report vs Monthly Economic Review (MER)
The Bank of Tanzania publishes domestic debt data through two channels — the
Government Domestic Debt report (DOCX) and the
Monthly Economic Review (MER) for February 2026.
Minor variations exist between these two sources due to timing, rounding and
classification adjustments.
Creditor Category
BoT Debt Report (TZS B)
MER Feb 2026 (TZS B)
Variance
Share (Report)
Share (MER)
Commercial Banks
10,979.6
10,902.5
−77.1
29.0%
28.5%
Pension Funds
10,352.2
10,389.5
+37.3
27.3%
27.1%
Bank of Tanzania
6,695.2
7,436.0
+740.8
17.7%
19.4%
Insurance Companies
2,006.1
2,005.0
−1.1
5.3%
5.2%
BOT Special Funds
737.8
737.8
0.0
1.9%
1.9%
Others
7,128.0
7,128.9
+0.9
18.8%
18.6%
Total
38,599.6 / 37,899.0
38,599.7
~0
100%
100%
Most Notable Variance — Bank of Tanzania: The BoT Debt Report shows
TZS 6,695.2B while the MER shows TZS 7,436.0B — a difference of TZS 740.8
billion (10.9%). This likely reflects the timing of how BoT's own
holdings (e.g. overdraft facilities and special accounts) are classified and
consolidated across reporting periods. Analysts should note this when modelling
precise creditor shares.
BoT Debt Report vs Monthly Economic Review (MER) — Data Comparison
TZS Billion — January 2026 figures across both official BoT publications
14
Macroeconomic Indicators Underpinning the Debt Structure
Tanzania's domestic debt structure does not exist in isolation. It is embedded in
a broader macroeconomic environment that influences borrowing costs, debt
sustainability, and economic growth outcomes.
6.0–6.3%
GDP Growth Forecast 2026
Driven by mining, agriculture and services
3.2%
Inflation Rate
Well within BoT's single-digit target
5.75%
Central Bank Rate (CBR)
Benchmark rate; accommodative stance
6.68%
IBCM Rate
Inter-bank cash market; above CBR floor
USD 6.3B
Foreign Exchange Reserves
Adequate import cover; supports TZS stability
13.4%
Unemployment Rate
Underlines need for growth-inclusive spending
23.5%
Private Credit Growth
Robust; but at risk if domestic debt crowds out banks
TZS 49.2T
FY 2025/26 National Budget
Domestic securities finance ~34% of total budget
Tanzania Key Macro Indicators — 2026 Snapshot
Selected indicators relevant to domestic debt sustainability (normalised for display)
Budget Financing: How Domestic Debt Fits In
Budget Item
Value
Context
Total National Budget (FY 2025/26)
TZS 49.2 trillion
Approved national budget
Domestic Securities Financing Share
~34% (~TZS 16.7T)
Largest single domestic financing source
GDP Contribution from Debt Financing
1.0–1.5% of GDP
Via infrastructure spend funded by securities
Domestic Debt Servicing / Budget
~6.5%
TZS 669.8B monthly servicing vs total budget
Domestic Debt / GDP
~17%
Within manageable range; monitor upward trend
FDI Target (2026)
USD 15 billion
Supported by stable macro environment built on sound debt management
15
Risk & Opportunity Matrix for Domestic Debt
For investors, policymakers and business operators, Tanzania's domestic debt landscape
presents a balanced mix of structural opportunities and manageable risks.
The matrix below synthesises the key findings from the BoT data.
✅ Market Opportunities
Oversubscribed auctions signal excess liquidity and strong demand — enabling government to borrow at competitive rates
Pension fund AUM growth creates structural long-term demand for Treasury bonds, supporting market depth
Retail participation rising in the "Others" category — democratising access to government securities
85.4% securities-based debt supports a liquid secondary market for bond trading
FDI of USD 15 billion targeted for 2026 benefits from macro stability anchored by sound debt management
23.5% private credit growth benefits from BoT's accommodative stance enabled by controlled domestic borrowing
⚠️ Risks to Monitor
Domestic debt growing faster than GDP (~22% vs ~6.3%) — debt-to-GDP ratio creeping toward 20%
Monthly servicing of TZS 669.8B (interest 54.6%) could escalate if yields rise at future auctions
Crowding out risk: if banks over-allocate to government securities, private sector credit could be squeezed
Urban concentration of fiscal spend — rural agriculture (26% GDP) may under-benefit from debt-funded infrastructure
MER vs report variance for BoT holdings (TZS 740.8B gap) introduces uncertainty in creditor analytics
Social spending trade-off: rising interest payments (TZS 365.9B/month) divert resources from poverty reduction targets (~20% by 2030)
Tanzania Domestic Debt — Risk vs Opportunity Scorecard
Illustrative scoring (1–10) across six dimensions based on BoT data
16
Frequently Asked Questions (FAQ)
The following questions address common points of interest from investors, researchers
and policymakers engaging with Tanzania's domestic debt data.
As of January 2026, Tanzania's government domestic debt stock stands at
TZS 38,599.6 billion (approximately TZS 38.6 trillion). This is up 1.9%
from TZS 37,899.0 billion at end-December 2025, and up 13.0% from TZS 34,154.9 billion
in January 2025. The stock has nearly tripled since 2018 (TZS 13,618.8 billion),
reflecting sustained expansion of government development financing through the
domestic securities market.
Commercial banks hold the single largest share at 29.0%
(TZS 10,979.6 billion), followed closely by pension funds at 27.3%
(TZS 10,352.2 billion). Together, these two institutional groups account for
over 56% of all domestic debt. The Bank of Tanzania holds a further
17.7%, while "Others" (institutions, individuals, non-residents) hold 18.8%.
The Bank of Tanzania's share fell from 20.8% (Jan 2025) to
17.7% (Jan 2026), a decline of 3.1 percentage points — representing
a TZS 417.1 billion reduction in absolute holdings. This is generally viewed as a
positive development: it signals that the government is reducing reliance
on central bank financing (often called "monetisation of the deficit"), instead
shifting to market-based borrowing from commercial banks, pension funds and other
investors. Reduced BoT financing helps contain inflationary pressure.
As of January 2026, 80.4% (TZS 31,015.1 billion) of domestic debt
consists of long-term Government/Treasury Bonds. Treasury Bills account
for 4.7% (TZS 1,821.4 billion), Government Stocks for 0.4% (TZS 135.7 billion),
and Non-Securitised Debt (including overdraft facilities) for the remaining 14.6%
(TZS 5,627.3 billion). Altogether, 85.4% of domestic debt is held in
market-traded securities — indicating a mature and liquid government securities market.
In January 2026, the government serviced TZS 669.8 billion in
domestic debt obligations — comprising TZS 303.9 billion in principal
repayments (45.4%) and TZS 365.9 billion in interest payments (54.6%).
The fact that interest payments exceed principal repayments reflects the large and
growing stock of debt. At approximately 6.5% of the national budget, this
servicing cost is manageable but bears watching as the debt stock continues to grow.
As of early 2026, evidence of significant crowding-out is not yet confirmed —
private sector credit growth remains robust at 23.5% annually. However,
the risk exists if domestic debt continues to grow at 17–22% per year while the banking
sector's capacity to finance both government and private borrowers is limited. The key
risk threshold is if domestic debt growth consistently exceeds 22% — at that point,
banks may prioritise zero-risk-weighted government bonds over lending to SMEs,
which contribute 40% of GDP.
Pension funds such as NSSF, PSSSF and LAPF have long-dated liabilities —
they must pay out pension benefits decades into the future. To meet these obligations,
they need stable, long-term, predictable income streams. Government
Treasury bonds (typically 5–25 year maturities at yields around 11–13%) are nearly
ideal: they offer low default risk, consistent coupon payments, and long enough
duration to match pension liability profiles. As Tanzania's formal employment
base grows and fund contributions increase, pension fund demand for long-dated
government bonds is expected to keep rising.
An oversubscribed auction means that investors submitted bids exceeding the
government's offered amount. For example, in January 2026, a 10-year bond
auction was oversubscribed by 34%, with total bids reaching TZS 840 billion against
the offered amount. This is positive for several reasons: it confirms
investor confidence in Tanzania's creditworthiness, it allows the
government to reject high-yield bids and keep borrowing costs low,
and it signals market depth — sufficient savings are being recycled into government
instruments to fund public investment without excessive fiscal strain.
17
Data Notes, Methodology & Definitions
This section provides essential context for interpreting the data presented in this
analysis, including definitions, source notes, known data variances and analytical
methodology applied by TICGL researchers.
Primary Data Source
Bank of Tanzania (BoT) — Government Domestic Debt by Creditor Category report
(January 2026 data), published March 2026. Cross-referenced with BoT Monthly
Economic Review (MER) February 2026.
Currency & Units
All monetary values are denominated in Tanzanian Shilling (TZS),
expressed in billions (B) unless otherwise stated. 1 TZS Billion = TZS 1,000,000,000.
Total Debt Range
The document references two total debt figures: TZS 37,899.0B (end-December
2025 / year-end 2025) and TZS 38,599.6B (end-January 2026). Both are
referenced in context throughout this analysis.
MER Variance Note
Minor differences exist between the debt report and MER data, most notably for
Bank of Tanzania holdings (TZS 740.8B gap). MER figures are shown in parentheses
where they differ materially from the primary report.
Growth Rates
Annual growth rates are calculated as year-on-year (YoY) percentage changes between
equivalent periods. The "2020→2022" rate reflects cumulative two-year growth
(annualised equivalent not shown separately).
Creditor Category Definitions
"Commercial Banks" excludes the Bank of Tanzania and Microfinance Banks (MFBs).
"Others" includes SACCOs, public enterprises, individuals and non-resident investors
per BoT classification.
Instruments Classification
"Government Bonds" = Treasury Bonds with maturities of 2 years and above.
"Treasury Bills" = maturities of 35 to 364 days. "Non-Securitised Debt" includes
Ways & Means advances, overdraft and other direct credit arrangements.
GDP Reference
GDP estimates used for debt-to-GDP ratios (~17%) are based on BoT and IMF
projections for Tanzania's nominal GDP for FY 2025/26. Actual ratios may vary
upon final GDP outturn data.
TICGL Analytical Disclaimer
This analysis is produced by TICGL for informational and research purposes.
It does not constitute investment advice. For the most current data,
visit www.bot.go.tz.
Key Abbreviations Used
Abbreviation
Full Name
Context
BoT
Bank of Tanzania
Central bank; primary data source
TZS
Tanzanian Shilling
National currency
MER
Monthly Economic Review
BoT's monthly macroeconomic publication
NSSF
National Social Security Fund
Largest pension fund in Tanzania
PSSSF
Public Service Social Security Fund
Public servants' pension scheme
LAPF
Local Authorities Provident Fund
Local government workers' fund
IBCM
Inter-Bank Cash Market
Short-term interbank lending market
CBR
Central Bank Rate
BoT's benchmark policy rate
OMO
Open Market Operations
BoT's monetary policy toolkit
FDI
Foreign Direct Investment
External investment inflows to Tanzania
SME
Small and Medium Enterprise
Key private sector contributor (~40% GDP)
GDP
Gross Domestic Product
Total value of Tanzania's economic output
ALM
Asset-Liability Management
Banks' portfolio balancing approach
FY
Financial Year
Tanzania's FY runs July–June
For the latest data: Tanzania's domestic debt figures are updated monthly
by the Bank of Tanzania. The most current data is available at
www.bot.go.tz.
TICGL publishes updated economic analyses at
ticgl.com and through the
Tanzania Business Intelligence Dashboard.
Data Sources: Bank of Tanzania — Government Domestic Debt by Creditor Category (March 2026);
BoT Monthly Economic Review (February 2026); Tanzania National Budget FY 2025/26.
Analysis by TICGL – Tanzania Investment and Consultant Group Ltd.
Tanzania Current Account Performance March 2026 | TICGL Economic Analysis
Tanzania Current Account Performance March 2026
A comprehensive analysis of Tanzania's external sector — goods trade, service receipts, foreign reserves, and economic implications for 2026, based on Bank of Tanzania data.
📅 Published: March 2026📊 Source: Bank of Tanzania (BoT)🏢 Published by: TICGL Research
Current Account Deficit
USD 1.93B
▼ 21.3% YoY
Goods Exports
USD 10.80B
▲ 16.7% YoY
Service Receipts
USD 7.38B
▲ 7.2% YoY
Tourism Revenue
USD 3.97B
▲ 53.8% of services
Foreign Reserves
USD 6.30B
4.8 months import cover
Services Surplus
USD 4.17B
▲ 2.6% YoY
01
Overview of Tanzania's External Sector Performance
Tanzania's external sector showed continued improvement in early 2026, with the current account deficit narrowing to USD 1,927.8 million in the year ending January 2026, down from USD 2,448.5 million in the previous year — a 21.3% improvement. This was driven by robust goods exports (up 16.7%) led by gold, and rising service receipts led by tourism and transport.
Foreign reserves rose to USD 6,295.3 million by end-January 2026, providing 4.8 months of import coverage — surpassing both EAC and national benchmarks — bolstering macroeconomic stability. The services trade surplus reached USD 4,174.9 million, helping to offset a goods deficit of USD 4,287.8 million.
💡
What is the Current Account? The current account measures the balance of trade in goods and services, primary income, and secondary income between Tanzania and the rest of the world. A deficit means Tanzania spends more on imports (goods, services, income transfers) than it earns from exports.
📌
Link to Government Securities Market: Strong external performance enhances reserves and Shilling stability (mild 0.97% depreciation), reducing FX risks and borrowing needs. This contributes to oversubscribed bond auctions (34% oversubscription for 10-year bonds at 11.30% yield), lowering domestic yields and enabling affordable financing for development.
Tourist arrivals up 6.1%, supporting USD 3.97B in tourism receipts
📈
GDP Growth (2026)
6.0–6.3%
Projected GDP growth driven by exports in mining and tourism
🏦
FDI Target
USD 15B
Tanzania's 2026 FDI target supported by strong reserves and Shilling stability
02
Current Account Summary (Year Ending January 2026)
The current account deficit narrowed to USD 1,927.8 million in the year ending January 2026, compared with USD 2,448.5 million in 2025, primarily due to strong goods export growth (+16.7%) and improved service receipts (+7.2%). Tanzania still experiences a deficit mainly due to high goods imports, but service exports — particularly tourism — help significantly reduce the imbalance.
Component
Year Ending Jan 2025 (USD M)
Year Ending Jan 2026 (USD M)
Approx. TZS (Trillion)
% Change
Goods Exports
9,251.4
10,795.7
28.1
▲ 16.7%
Goods Imports
14,351.8
15,083.5
39.2
▲ 5.1%
Goods Balance
-5,100.4
-4,287.8
-11.1
▼ 15.9%
Services Receipts
6,879.1
7,376.9
19.2
▲ 7.2%
Services Payments
2,808.3
3,202.0
8.3
▲ 14.0%
Services Balance
4,070.8
4,174.9
+10.9
▲ 2.6%
Primary Income (Net)
-1,955.8
-2,093.5
-5.4
▼ 7.0%
Secondary Income (Net)
536.8
278.6
0.7
▼ 48.1%
Current Account Balance
-2,448.5
-1,927.8
-5.0
▲ Improved 21.3%
Source: Bank of Tanzania (BoT) — Year ending January 2026 (provisional). Includes informal cross-border exports.
Goods vs Services Balance
Year ending Jan 2026 — USD Millions
Current Account Deficit: YoY Comparison
USD Millions — Jan 2025 vs Jan 2026
Full Current Account Components — Year Ending Jan 2026 (USD Million)
Data note: Figures marked (p) are provisional. Goods exports include informal cross-border trade. TZS conversions use approximate rate of TZS 2,600/USD.
03
Monthly Trend Analysis (Jan 2025 – Jan 2026)
Monthly data reveals the trajectory of Tanzania's external balance. The current account deficit stood at USD 311.3 million in January 2026, compared to USD 240.4 million in January 2025 and USD 281.4 million in December 2025, reflecting higher primary income outflows. However, goods exports in January 2026 (USD 1,082.3 million) remain significantly above January 2025 levels (USD 737.7 million), demonstrating sustained export strength.
Item
Jan 2025 (USD M)
Dec 2025 (USD M)
Jan 2026 (USD M)
Year End Jan 2025
Year End Jan 2026 (p)
% Change (Annual)
Goods Account
-460.5
-403.7
-411.7
-5,100.4
-4,287.8
▼ 15.9%
Exports*
737.7
1,090.5
1,082.3
9,251.4
10,795.7
▲ 16.7%
Imports
1,198.2
1,494.2
1,493.9
14,351.8
15,083.5
▲ 5.1%
Services Account
357.7
293.9
281.5
4,070.8
4,174.9
▲ 2.6%
Receipts
583.6
586.9
586.5
6,879.1
7,376.9
▲ 7.2%
Payments
225.9
293.0
305.0
2,808.3
3,202.0
▲ 14.0%
Primary Income
-170.3
-178.3
-193.9
-1,955.8
-2,093.5
▼ 7.0%
Secondary Income
32.8
6.8
12.7
536.8
278.6
▼ 48.1%
Current Account Balance
-240.4
-281.4
-311.3
-2,448.5
-1,927.8
▲ Improved 21.3%
*Includes informal cross-border exports. (p) = provisional. Source: Bank of Tanzania
Monthly Current Account Balance & Key Components — Trend Line (USD Million)
Jan 2025 · Dec 2025 · Jan 2026
Monthly Exports vs Imports Trend
Goods Account — USD Million
Monthly Services: Receipts vs Payments
Services Account — USD Million
04
Export of Services (Service Receipts by Category)
Service exports represent earnings Tanzania receives from non-residents for services. In the year ending January 2026, total service receipts reached USD 7,376.9 million (≈ TZS 19.2 trillion), growing 7.2% year-on-year. Travel (Tourism) remains the single largest contributor, accounting for over 53.8% of all service receipts.
Service Receipts Composition
Year Ending Jan 2026 — USD Million
Service Category
USD Million
TZS Trillion
Share
✈️ Travel (Tourism)
3,969.6
10.3
53.8%
🚢 Transport
2,875.4
7.5
38.9%
⚙️ Other Services
531.8
1.4
7.2%
Total Service Receipts
7,376.9
19.2
100%
Source: Bank of Tanzania — Year ending January 2026 (provisional)
🌍
Travel (Tourism) — USD 3,969.6M: Covers accommodation, food, transport, and recreation for international tourists. Tourism is the largest source of service export revenue in Tanzania, with visitor arrivals reaching 2.29 million (up 6.1%).
🚛
Transport Services — USD 2,875.4M: Includes freight services, shipping, logistics, and airline transport. These earnings increased due to transit trade and regional transport growth.
🏗️
Other Services — USD 531.8M: Covers construction, financial services, insurance, telecommunications, and professional services.
Service Receipts by Category — USD Million (Year Ending Jan 2026)
Horizontal bar comparison showing relative magnitude of each service category
05
Import of Services (Service Payments)
Service imports represent payments made by Tanzanian residents to foreign providers. In the year ending January 2026, service payments increased to USD 3,202 million (≈ TZS 8.3 trillion), up 14% year-on-year. Transport services dominate service imports, primarily driven by freight charges for imported goods, international shipping, and air transport.
Service Payments Composition
Year Ending Jan 2026 — USD Million
Service Category
USD Million
TZS Trillion
Share
🚢 Transport
1,501.3
3.9
46.9%
✈️ Travel
666.6
1.7
20.8%
⚙️ Other Services
1,034.1
2.7
32.3%
Total Service Payments
3,202.0
8.3
100%
Source: Bank of Tanzania — Year ending January 2026 (provisional)
⚠️
Why Transport Dominates Service Imports: As Tanzania imports large volumes of goods (capital equipment, fuel, industrial supplies), the associated freight charges paid to foreign shipping and logistics companies represent the largest single component of service payments at 46.9% (USD 1,501.3M).
06
Services Trade Balance — A Key Stabiliser
The services balance is calculated as: Service Receipts − Service Payments. Tanzania maintains a large surplus in services trade, which helps offset the deficit in goods trade and is a critical stabilising force in the country's overall current account position.
Indicator
USD Million
TZS Trillion
Notes
Services Receipts (Exports)
+7,376.9
+19.2
Tourism + Transport + Other
Services Payments (Imports)
-3,202.0
-8.3
Transport freight dominates
Net Services Balance
+4,174.9
+10.9
SURPLUS
Goods Balance (for comparison)
-4,287.8
-11.1
Exports − Imports of goods
Net Goods + Services
-112.9
-0.3
Nearly balanced at trade level
Tanzania's services surplus (USD 4.2B) nearly offsets the entire goods deficit (USD 4.3B). Source: Bank of Tanzania
Services vs Goods Balance — Comparative View (USD Million, Year Ending Jan 2026)
How the services surplus offsets the goods deficit
Complete Services Trade: Receipts vs Payments by Category (USD Million)
Side-by-side comparison of what Tanzania earns vs pays for each service type
07
Key Observations & Findings
🏖️
Observation 1
Tourism Dominates
Travel receipts contribute more than 53.8% of total service exports — the single largest source of service revenue in Tanzania's external sector.
🚛
Observation 2
Transport Growing Fast
Transport earnings (USD 2.88B) rose rapidly due to transit trade through Tanzania and growth in regional logistics services — supporting East Africa's trade hub ambitions.
📦
Observation 3
Freight = Biggest Outflow
As Tanzania imports large goods volumes, transport and freight payments to foreign companies represent 46.9% of service outflows — directly linked to import volumes.
⚖️
Observation 4
Services Offset Trade Gap
The USD 4.17B services surplus nearly fully offsets the USD 4.29B goods deficit — making services the critical stabiliser of Tanzania's current account position.
✅
Conclusion: Data from the Bank of Tanzania report show that Tanzania's external sector is supported by strong growth in tourism and transport service exports, rising service receipts reaching TZS 19.2 trillion, and a services trade surplus of approximately TZS 10.9 trillion. However, the country still experiences a current account deficit due to high goods imports — especially capital goods, fuel, and industrial supplies.
08
Economic Implications for Growth & Development
The external sector's resilience supports Tanzania's development by narrowing deficits, building reserves, and funding imports for growth sectors without excessive borrowing. Linked to the securities market, improved performance stabilises liquidity, lowers risk premiums, and attracts institutional buyers (banks and pensions accounting for 55% of government bond buyers), recycling export earnings into growth bonds.
Implication Category
Positive Impact on Growth
Potential Risks
Link to Securities Market
Trade Balance Improvement
Exports up 12.7% to USD 18.2B boost mining/agriculture, adding jobs (160,000 in 2025); tourism (USD 4B) aids diversification
Goods deficit (USD 4.3B) from imports (up 5.1%) exposes to oil shocks, potentially widening to 3% GDP
Analysis based on Bank of Tanzania data and TICGL Economic Research. IBCM = Interbank Cash Market.
Foreign Reserves vs Import Coverage
USD Billion — End-January 2026
Key Export Composition (Goods)
USD Million — Year Ending Jan 2026
Sources: Bank of Tanzania Monthly Economic Review, January 2026; TICGL Economic Research Desk. All figures in USD millions unless stated. (p) = provisional. For the latest data, visit www.bot.go.tz.
Goods Trade Deep-Dive — Exports, Imports & the Balance
Tanzania's goods trade showed a marked improvement in the year ending January 2026. Goods exports surged to USD 10,795.7 million (+16.7% YoY), led by gold which alone contributed USD 4,900.7 million (45.4% of total goods exports). Meanwhile, goods imports rose more modestly at 5.1% to USD 15,083.5 million, driven by capital goods, fuel, and industrial supplies needed to sustain Tanzania's infrastructure expansion and manufacturing base.
The result was a narrowing of the goods deficit by 15.9% — from USD 5,100.4 million to USD 4,287.8 million — representing a significant improvement in Tanzania's trade competitiveness.
USD 10.80B
Total Goods Exports
▲ 16.7% year-on-year
USD 15.08B
Total Goods Imports
▲ 5.1% year-on-year
USD -4.29B
Goods Trade Deficit
Improved from -USD 5.1B
USD 4.90B
Gold Exports
▲ 39.3% — 45.4% of exports
Goods Export Composition — Share of Total
🥇 Gold ExportsUSD 4,900.7M — 45.4%
💎 Other Minerals (est.)~USD 2,100M — 19.5%
🌿 Agricultural Products~USD 1,800M — 16.7%
🐟 Fish & Marine Products~USD 450M — 4.2%
📦 Manufactured & Other~USD 1,545M — 14.3%
🔑
Informal Cross-Border Exports: Official figures include informal cross-border exports — a critical component often under-measured. These represent small-scale trade across Tanzania's land borders to Kenya, Uganda, Rwanda, Zambia, Mozambique, and DRC, and are especially significant for agricultural commodities.
Goods Trade: Exports vs Imports
Annual — Year Ending Jan 2025 vs Jan 2026 (USD Million)
Gold is Tanzania's single most important export commodity, generating USD 4,900.7 million in the year ending January 2026 — a 39.3% surge from the previous year. This extraordinary growth reflects both higher global gold prices and increased production from Tanzania's major mines (including Geita Gold Mine, Bulyanhulu, and North Mara). Gold alone accounts for 45.4% of all goods export earnings, making Tanzania one of Africa's top gold exporters.
Gold vs Other Exports — Year Ending Jan 2026
USD Million — share of total goods exports
USD 4.90B
Gold Export Value
Year ending Jan 2026
+39.3%
YoY Growth
Fastest-growing export
45.4%
Share of Goods Exports
Dominant single commodity
#1
Top Export
Africa's major gold exporter
⚠️
Concentration Risk: While gold's surge is a major positive, Tanzania's heavy dependence on a single commodity creates vulnerability to global price shocks. A 20% drop in gold prices could reduce export earnings by roughly USD 980 million, potentially widening the current account deficit significantly.
🏗️
Diversification Push: Under Vision 2050, Tanzania is investing in diversifying beyond gold — into processed agricultural exports, manufacturing, and blue economy sectors — to reduce commodity concentration risk while gold revenues remain strong.
Gold Export Earnings vs Current Account Deficit — Annual Comparison (USD Million)
Gold earnings alone now nearly equal the entire current account deficit — a remarkable structural shift
Metric
Year Ending Jan 2025
Year Ending Jan 2026 (p)
Change
Gold Export Value (USD M)
~3,519
4,900.7
▲ 39.3%
Gold as % of Total Goods Exports
~38.0%
45.4%
▲ 7.4 ppts
Gold vs Current Account Deficit Ratio
~1.44x
2.54x
▲ Significantly higher
Total Goods Exports (USD M)
9,251.4
10,795.7
▲ 16.7%
Current Account Deficit (USD M)
2,448.5
1,927.8
▲ Improved 21.3%
Source: Bank of Tanzania. Gold 2025 estimate based on proportional BoT data. (p) = provisional.
11
Foreign Reserves & Shilling Stability
Tanzania's foreign exchange reserves rose to USD 6,295.3 million by end-January 2026, providing 4.8 months of import coverage — surpassing both the EAC minimum benchmark of 4.5 months and the national target of 4.0 months. This buffer is critical: it signals Tanzania's capacity to withstand external shocks, service import obligations without disruption, and maintain investor confidence.
The Tanzanian Shilling experienced only a mild 0.97% depreciation over the period — remarkably stable given global FX volatility — directly attributed to the strong reserve position and improving current account trajectory.
USD 6.30B
Foreign Reserves
End-January 2026
4.8 months
Import Coverage
Above EAC (4.5M) & National (4.0M) benchmarks
0.97%
TZS Depreciation
Mild — well-managed stability
~15%
Securities Market / GDP
Deepening domestic capital market
Reserves vs Regional & National Benchmarks
Benchmark
Import Months
Status
🇹🇿 Tanzania Actual (Jan 2026)
4.8 months
✓ EXCEEDS ALL
🌍 EAC Minimum Benchmark
4.5 months
EAC Threshold
🏛️ National Target
4.0 months
National Target
⚠️ Minimum Adequate (IMF)
3.0 months
Far Exceeded
Tanzania's reserves comfortably exceed all regional and international adequacy thresholds.
🏦
Securities Market Link: Strong reserves reduce the need for external borrowing, stabilising domestic yields at 9–12% for T-bills. This deepens Tanzania's government securities market (currently ~15% of GDP) and attracts institutional buyers — banks and pension funds — who account for 55% of bond subscriptions.
Reserves Coverage vs Benchmarks
Months of Import Coverage
12
Government Securities Market — External Sector Linkage
Tanzania's improving external sector is directly interlinked with the performance of its domestic government securities market. Strong export earnings and rising reserves enhance macroeconomic confidence, reduce FX risk premiums, and lower the cost of domestic borrowing — creating a virtuous cycle that funds infrastructure and development without increasing external debt vulnerability.
1
Improved Reserves → Shilling Stability FX Channel
USD 6.3B in reserves supports the Tanzanian Shilling (only 0.97% depreciation), reducing FX risk perceived by domestic and foreign bond investors, lowering the risk premium embedded in Treasury yields.
2
Lower Risk Premium → Oversubscribed Auctions Bond Market
Strong external fundamentals contributed to 34% oversubscription of 10-year government bonds at an 11.30% yield. Total bids reached TZS 840 billion — demonstrating deep domestic investor appetite and strong market confidence.
3
Reduced External Borrowing Needs Debt Management
As reserves grow and domestic markets deepen (targeting ~15% GDP), Tanzania can reduce reliance on expensive external concessional and commercial borrowing — improving debt sustainability while funding Vision 2050 infrastructure priorities.
4
IBCM Liquidity & BoT Operations Monetary Policy
Export earnings flowing through the banking system support the Interbank Cash Market (IBCM rate: 6.68%), providing BoT with the liquidity management tools needed to conduct open market operations and maintain monetary stability.
Banks and pension funds recycling export earnings into bonds
Securities Market Depth / GDP
~15%
Growing — target is deeper market to reduce external dependence
Source: Bank of Tanzania; TICGL Economic Research Desk — Year ending January 2026
Yield Landscape — Government Securities (Tanzania, 2026)
Interest rate structure across maturities — reflects external sector confidence
13
Risks & Opportunities — External Sector Outlook
While Tanzania's external sector shows significant improvement, a balanced assessment requires identifying both the opportunities created by the current positive trajectory and the risks that could undermine these gains. The following analysis maps key factors across both dimensions.
🟢 Opportunities
🥇
Gold supercycle: If global gold prices sustain above USD 2,000/oz, Tanzania's export revenues could grow further, compressing the current account deficit towards 2% GDP.
✈️
Tourism recovery momentum: With 2.29M arrivals and USD 4B in receipts, Tanzania has runway to grow to 3M+ arrivals by 2028 under Magical Kenya/Tanzania positioning.
🚛
Transit hub expansion: The TAZARA corridor, SGR, and Dar es Salaam port upgrades could double transit freight earnings within 5 years.
🌿
Agricultural value addition: Processed agricultural exports (coffee, cashew, avocado) could grow 3–4× if value chain investment accelerates.
🔋
Critical minerals: Graphite, lithium, and REE deposits offer next-generation export diversification aligned with global green energy transition demand.
📊
Deepening securities market: Oversubscribed bonds signal capacity to issue longer-dated infrastructure bonds, reducing costly short-term refinancing.
🔴 Risks
🛢️
Oil price shock: Tanzania imports ~21% of goods as fuel. A 30% oil price surge could add ~USD 960M to the import bill, potentially widening the deficit to 3% GDP.
📉
Gold price reversal: A 20% gold price drop could reduce export earnings by ~USD 980M, partially reversing the 16.7% goods export growth.
💸
Primary income pressure: Primary income outflows (USD 2.1B, +7% YoY) — largely profit repatriation by mining investors — will grow as more foreign-financed projects come on stream.
📉
Secondary income decline: A 48.1% drop in secondary income (remittances) impacts rural household income and domestic consumption.
🌐
Global trade disruptions: Supply chain fragility, geopolitical shocks, or a global recession could simultaneously reduce export demand and increase import prices.
💱
External debt servicing: As infrastructure borrowing rises, external debt service costs may increase — competing with reserves for FX resources.
Sensitivity Analysis — Current Account Deficit Under Shock Scenarios (USD Million)
Illustrative scenarios showing how key risk factors could shift the current account deficit from the baseline of USD 1,927.8M
14
Vision 2050 & Medium-Term Economic Outlook
Tanzania's current account improvement aligns closely with the macroeconomic trajectory set out under Vision 2050 — the long-term development framework targeting Tanzania's transformation into a high middle-income economy. The external sector's 2026 performance demonstrates that Tanzania is on track for its medium-term GDP growth projection of 6.5–6.9% as mining, tourism, and services continue to expand.
GDP Growth Trajectory — Actual & Projected
Tanzania GDP Growth Rate (%)
Historical & projected under Vision 2050 path
Vision 2050 — Key External Sector Targets
Target Indicator
2026 (Current)
2030 Target
2050 Vision
GDP Growth Rate
6.0–6.3%
7.0%
8.0%+
FDI Inflows
USD 15B target
USD 20B
USD 50B+
Exports / GDP Ratio
~22%
~28%
~40%
Tourism Arrivals
2.29M
4M
10M+
Import Coverage (Months)
4.8
5.0
6.0
Current Account / GDP
-2.2%
-1.5%
Balanced
Projections are aligned with Tanzania's Vision 2050 and NDP targets. TICGL analysis based on BoT and Government planning documents.
🎯
Medium-Term Projection: TICGL projects the current account deficit narrowing to 2.2% of GDP in the near term, with a path toward balance as export diversification — particularly in agriculture value chains, manufacturing, and blue economy — progressively reduces import dependency.
15
Comprehensive Summary — All Key Indicators at a Glance
The following master table consolidates all key indicators from the Bank of Tanzania's current account report for year ending January 2026, providing a single-reference summary for analysts, investors, and policymakers.
Category
Indicator
Year Jan 2025
Year Jan 2026 (p)
% Change
Assessment
GOODS TRADE
Goods Exports (USD M)
9,251.4
10,795.7
▲ 16.7%
Strong
Goods Imports (USD M)
14,351.8
15,083.5
▲ 5.1%
Moderate
Goods Balance (USD M)
-5,100.4
-4,287.8
▼ 15.9%
Improving
SERVICES TRADE
Services Receipts (USD M)
6,879.1
7,376.9
▲ 7.2%
Strong
Services Payments (USD M)
2,808.3
3,202.0
▲ 14.0%
Watch
Services Balance (USD M)
4,070.8
4,174.9
▲ 2.6%
Surplus
INCOME
Primary Income (USD M)
-1,955.8
-2,093.5
▼ 7.0%
Pressure
Secondary Income (USD M)
536.8
278.6
▼ 48.1%
Declining
OVERALL
Current Account Balance (USD M)
-2,448.5
-1,927.8
▲ 21.3%
Improving
STABILITY
Foreign Reserves (USD M)
—
6,295.3
Above benchmarks
Strong
Import Coverage (Months)
—
4.8
Above EAC (4.5)
Adequate+
TZS Depreciation
—
0.97%
Very mild
Stable
Master summary — Bank of Tanzania provisional data, year ending January 2026. Compiled by TICGL Economic Research Desk.
Tanzania External Sector — Performance Radar (Year Ending Jan 2026)
Normalised scores (0–100) across six dimensions of external sector health
📋 TICGL Final Assessment — Tanzania's External Sector, March 2026
Based on Bank of Tanzania data for the year ending January 2026, Tanzania's external sector is demonstrating broad-based improvement across the most critical indicators. The current account deficit narrowed 21.3% to USD 1,927.8 million — the most significant improvement in several years — driven by a confluence of factors: surging gold exports, robust tourism recovery, growing transport services, and disciplined reserve management.
The external sector's strength provides a solid macroeconomic foundation for Tanzania's Vision 2050 development ambitions, supporting government securities markets, FDI attraction, and Shilling stability. However, persistent challenges — including high goods imports, a rising primary income outflow, and declining remittances — require continued diversification efforts and global risk management.
✅ Current account deficit improved 21.3% to USD 1.93B
✅ Goods exports surged 16.7% to USD 10.80B
✅ Gold exports soared 39.3% to USD 4.90B
✅ Tourism receipts strong at USD 3.97B (53.8% of services)
✅ Services surplus of USD 4.17B offsets most of goods deficit
✅ Reserves at USD 6.30B — 4.8 months import cover
✅ Shilling stable — only 0.97% depreciation
⚠️ Primary income outflows rising (+7.0% to USD 2.09B)
⚠️ Secondary income (remittances) fell 48.1%
⚠️ Goods imports still high at USD 15.08B
📊 GDP growth on track at 6.0–6.3% for 2026
🎯 Medium-term target: deficit at 2.2% of GDP
Disclaimer: This analysis is prepared by TICGL – Tanzania Investment and Consultant Group Ltd based on publicly available Bank of Tanzania data. All figures marked (p) are provisional. This report is for informational purposes and does not constitute investment advice. For the latest BoT data, visit www.bot.go.tz.
Why TRA's Strong Performance Is Still Not Enough | TICGL Analysis
Why TRA's Strong Performance Is Still Not Enough
Despite record collections of TSh 18.77 trillion and 103.7% efficiency, Tanzania's revenue growth cannot match its development ambitions
18.77T
TSh Collected (H1 2025/26)
103.7%
Target Achievement
13.6%
Year-on-Year Growth
6-7T
TSh Budget Deficit
Record-Breaking Performance
The Tanzania Revenue Authority (TRA) has delivered one of its strongest revenue performances in recent history, consistently surpassing collection targets and recording solid year-on-year growth. In the first half of the 2025/26 fiscal year (July to December 2025), TRA collected TSh 18.77 trillion, exceeding its target of TSh 18.10 trillion and achieving an overall efficiency of 103.7%. This performance represents a 13.6% increase compared to the same period in 2024/25, when collections stood at TSh 16.52 trillion.
Historic Achievement: December 2025 set a new record with TSh 4.13 trillion collected in a single month, the highest monthly revenue ever recorded by the Authority. Monthly collections exceeded targets in all six months, with efficiency ranging between 100.4% and 110.0%.
Monthly Revenue Performance
Month
Collections 2024/25
Target 2025/26
Collections 2025/26
Efficiency
Growth
July
TSh 2.35T
TSh 2.57T
TSh 2.68T
104.1%
14.1%
August
TSh 2.42T
TSh 2.56T
TSh 2.82T
110.0%
16.3%
September
TSh 3.02T
TSh 3.31T
TSh 3.47T
105.0%
15.1%
October
TSh 2.65T
TSh 2.80T
TSh 2.81T
100.4%
6.0%
November
TSh 2.50T
TSh 2.85T
TSh 2.86T
100.4%
14.4%
December
TSh 3.58T
TSh 4.01T
TSh 4.13T
102.9%
15.5%
Total
TSh 16.52T
TSh 18.10T
TSh 18.77T
103.7%
13.6%
What's Driving the Success
This strong performance is not accidental. It reflects improved tax administration, aggressive debt recovery, and enhanced compliance measures. Key achievements include:
TSh 483 billion collected from tax arrears through enhanced debt recovery
Registered taxpayers increased by 7.3% to 7.68 million
2,094 new staff trained to strengthen institutional capacity
Over the medium term, the results are even more striking. Revenue collected in the first half of the fiscal year has more than doubled since 2020/21, rising from TSh 9.24 trillion to TSh 18.77 trillion, while TRA's operational efficiency improved from 77.48% to 85.71%.
The Fundamental Problem: Revenue vs. Expenditure Mismatch
Yet, despite these undeniable achievements, TRA's strong performance is still not enough to meet Tanzania's broader economic and development needs. The core challenge lies not in revenue administration, but in the mismatch between revenue growth and the scale of government expenditure requirements.
For 2025/26, the Government has set an ambitious annual revenue target of TSh 36.06 trillion, equivalent to 14.1% of GDP. However, total government expenditure is projected at TSh 42 to 44 trillion, leaving a financing gap of approximately TSh 6 to 7 trillion.
Persistent Budget Deficits
This structural gap has resulted in persistent budget deficits averaging 3 to 4% of GDP over the past decade, even in years of strong revenue performance. The consequences are significant:
Fiscal Year
Budget Deficit
Deficit as % of GDP
Key Funding Sources
2020/21
TSh 4.2T
3.5%
Domestic borrowing, concessional loans
2021/22
TSh 4.8T
3.2%
External aid, bonds
2022/23
TSh 5.1T
3.0%
IMF loans, domestic revenue shortfalls
2023/24
TSh 5.4T
3.1%
Increased borrowing amid inflation
2024/25
TSh 5.6T
3.1%
External debt, grants
2025/26 (Projected)
TSh 6.5T
3.2%
Ongoing borrowing
The Debt Burden
To bridge this gap, the Government continues to rely on domestic and external borrowing, pushing public debt to about 42% of GDP by 2025. The implications are severe:
Debt servicing alone now absorbs 20 to 25% of the national budget
Interest payments in 2024/25 estimated at TSh 4.2 trillion, comparable to an entire month of peak TRA collections
This growing debt burden directly reduces the fiscal space available for new development projects
Structural Economic Constraints
Tanzania's challenges extend beyond the immediate revenue-expenditure gap. Several structural factors limit the impact of even strong tax collection outcomes:
Low Revenue-to-GDP Ratio
At 14.1% of GDP, Tanzania's revenue ratio lags behind regional peers such as Kenya (16 to 18%) and Rwanda (15 to 17%). This limits the Government's ability to finance large-scale infrastructure and social investments without borrowing. Flagship projects under FYDP III and the national development agenda require over TSh 10 trillion annually in capital spending alone. Even with strong TRA performance, domestic revenues currently cover only 60 to 70% of total budgetary needs.
The Informal Economy Challenge
More than 50% of economic activity remains informal, constraining tax potential despite the growing number of registered taxpayers. This vast shadow economy represents billions in uncollected revenue, limiting the government's fiscal capacity.
Weak Production Base
Domestic production growth remains modest at 2.4%, signaling a narrow industrial base. Revenue growth is still highly exposed to external shocks such as inflation, global commodity prices, and import fluctuations. Without a stronger manufacturing and production sector, revenue sustainability remains vulnerable.
Demographic and Climate Pressures
Population growth now exceeds 69 million people, while climate-related pressures on agriculture (which contributes about 25% of GDP) continue to push public spending upward faster than revenues can sustainably grow. These pressures create an ever-expanding need for public services, infrastructure, and social protection.
Exploring Tanzania's Development Financing
How can Tanzania bridge the gap between revenue collection and development needs? What structural reforms are necessary for fiscal sustainability?
TRA's recent revenue performance clearly demonstrates that Tanzania has made meaningful progress in strengthening tax administration and improving compliance. Exceeding collection targets, achieving over 100% efficiency, and more than doubling first-half revenues since 2020/21 are major institutional achievements that should not be understated.
However, the evidence also makes it clear that strong revenue performance alone cannot resolve Tanzania's fiscal and development challenges. Despite collecting TSh 18.77 trillion in just six months and targeting TSh 36.06 trillion for the full year, the Government continues to face annual budget deficits of around 3 to 4% of GDP, driven by expenditure needs that significantly exceed domestic revenue capacity.
The central issue, therefore, is not whether TRA is performing well. It clearly is. The question is whether the structure of the economy and the fiscal framework allow revenue gains to translate into sustainable development financing. A low revenue-to-GDP ratio (14.1%), a large informal sector, modest growth in domestic production, and rising demographic and climate-related pressures all limit the impact of even strong tax collection outcomes.
The Path Forward
TRA's performance should be viewed as a foundation rather than a solution. To move from short-term fiscal resilience to long-term sustainability, Tanzania must complement strong revenue administration with broader economic and fiscal reforms:
Expanding the tax base beyond the current 7.68 million registered taxpayers
Accelerating formalization of the 50% informal economy
Strengthening productive sectors to move beyond 2.4% domestic production growth
Improving expenditure efficiency and prioritization of public spending
Reducing dependence on external borrowing to create sustainable fiscal space
Only through this integrated approach can Tanzania ensure that rising revenues not only meet targets, but also meaningfully support economic growth, reduce borrowing, and deliver lasting development outcomes. The challenge is not administrative; it is structural. And addressing it will require reforms that go far beyond what any revenue authority, no matter how efficient, can achieve alone.
Tanzania’s economic performance in 2025 reflects a period of strong macroeconomic stability, export-led growth, and improving external resilience, underpinned by prudent monetary management by the Bank of Tanzania (BoT). As of 30 November 2025, the BoT’s financial position signals a notable strengthening of the country’s economic fundamentals, with total assets rising to TZS 29.67 trillion, equivalent to a 4.9% increase (about TZS 1.39 trillion) compared to October 2025. This expansion mirrors heightened foreign exchange inflows, record performance in the mining sector—particularly gold—and rising domestic economic activity, all of which have reinforced liquidity conditions and reserve buffers.
A defining feature of 2025 has been the rapid accumulation of gold and liquid assets. Total gold holdings (monetary and bullion combined) increased by 18.6% to TZS 4.67 trillion, driven by the BoT’s domestic gold purchase programme and Tanzania’s exceptional export performance. Gold export earnings reached an estimated USD 4.3–4.43 billion in the year ending September/October 2025, representing a 35–36% year-on-year increase and firmly establishing gold as the country’s leading foreign exchange earner. In parallel, cash and cash equivalents rose by 32.8% to TZS 4.45 trillion, reflecting strong inflows from exports and services such as tourism, as well as improved liquidity management. These trends have contributed to a more diversified and resilient reserve position.
These monetary and reserve developments are consistent with Tanzania’s broader macroeconomic outcomes in 2025. Real GDP growth is estimated at 6.0–6.3%, supported by mining, tourism (with arrivals rising by around 11%), agriculture, manufacturing, and large-scale infrastructure projects. Inflation remained subdued at about 3.4% in November 2025, comfortably within the BoT’s 3–5% target band, while foreign exchange reserves stood at around USD 6.17 billion (approximately 4.7 months of import cover) by end-October 2025, meeting regional adequacy benchmarks and enhancing exchange rate stability.
Economic Trajectory for 2026
Looking ahead, Tanzania’s macroeconomic outlook for 2026 remains broadly positive, building on the strong foundations established in 2025. Current projections from international and domestic sources point to real GDP growth of about 6.1–6.3% in 2026, indicating stable to slightly accelerating momentum. Growth is expected to continue being driven by mining (especially gold), tourism, infrastructure investments, manufacturing, and gradual expansion in private sector credit, supported by ongoing structural reforms aimed at improving the business environment.
Inflation in 2026 is projected to remain around 3.5%, still within the BoT’s policy target range, reflecting continued prudent monetary policy, stable food supply conditions, and moderated global energy prices. Foreign exchange reserves are expected to remain adequate—above 4.5–5 months of import cover, bolstered by sustained gold and tourism receipts and steady capital inflows. Gold exports are likely to remain elevated, potentially exceeding USD 4 billion, although performance will remain sensitive to global commodity prices and production dynamics.
Overall, the 2026 trajectory suggests that Tanzania is well positioned to consolidate its macroeconomic gains, strengthen external buffers, and advance toward its medium-term development goals, including upper-middle-income status. Nonetheless, risks such as commodity price volatility, climate-related shocks, and post-election policy adjustments could influence outcomes. Maintaining fiscal discipline, deepening export diversification, and sustaining prudent monetary management will be critical to preserving stability and translating growth into inclusive and resilient economic development beyond 2026. Read More:Tanzania Economic Updates December 2025
Key Changes in the BoT Balance Sheet (November vs. October 2025)
The table below highlights selected major items (in TZS '000) with significant changes, focusing on those relevant to economic development (e.g., reserves, gold, and liquidity indicators).
Item
30-Nov-2025 (TZS '000)
31-Oct-2025 (TZS '000)
Change (TZS '000)
% Change
Implications for Economy
Total Assets
29,671,370,947
28,276,931,699
+1,394,439,248
+4.9%
Strong reserve accumulation and economic expansion
Cash and Cash Equivalents
4,451,306,481
3,351,589,357
+1,099,717,124
+32.8%
Inflows from exports (e.g., gold, tourism) boosting liquidity
Monetary Gold
1,882,335,649
1,503,197,004
+379,138,645
+25.2%
Higher gold prices and BoT domestic purchases
Bullion Gold
2,790,183,836
2,437,344,646
+352,839,190
+14.5%
Reflects mining sector boom and reserve diversification
The most notable development is the ~18.6% increase in total gold holdings (combined monetary and bullion gold), driven by Tanzania's mining sector expansion and the BoT's policy of purchasing gold from domestic producers. This aligns with record gold export earnings of approximately USD 4.3–4.43 billion in the year ending September/October 2025, a ~35–36% surge year-on-year, fueled by high global gold prices and increased production.
Broader Tanzania Economic Indicators (2025 Context)
Tanzania's economy in 2025 demonstrates resilient growth, low inflation, and strengthening external buffers, supported by key sectors: mining (gold-led), tourism (strong recovery in arrivals), agriculture (stable output despite weather risks), and infrastructure investments. GDP growth is driven by exports and public projects, with foreign reserves providing a buffer against external shocks.
Indicator
Value (2025)
Notes/Source Context
Real GDP Growth (projected/full year)
6.0–6.3%
IMF projection 6.0%; Q2 actual 6.3%; driven by mining, tourism (+11% arrivals), agriculture
Headline Inflation (November 2025)
3.4%
Down from 3.5% in October; within BoT target (3–5%); food inflation cooled to ~6.6%
Foreign Exchange Reserves (end-October 2025)
~USD 6.17 billion (4.7 months import cover)
BoT data; some reports cite ~USD 6.4 billion excluding gold in November; adequate per EAC benchmarks
Mining and tourism leading export/FX earnings; agriculture employs ~65% of workforce
These indicators reflect sustained economic development:
Mining boom directly contributes to the BoT's gold reserve buildup, enhancing foreign exchange reserves and fiscal revenues.
Low inflation (around 3–3.5%) supports purchasing power and investment attractiveness.
Adequate reserves (4.5–5 months import cover) provide stability amid global uncertainties.
Ongoing reforms (e.g., infrastructure like ports/railways, LNG projects) and private sector lending growth signal diversification beyond traditional agriculture.
Overall, the BoT balance sheet reinforces a positive outlook for Tanzania's economy, characterized by export-led growth, macroeconomic stability, and progressive reserve accumulation in 2025.
Tanzania's Economic Trajectory for 2026
Tanzania's strong macroeconomic momentum in 2025 is expected to carry into 2026, with projections indicating continued resilient growth, low inflation, and strengthening external buffers. International and domestic forecasts highlight sustained performance in key sectors—particularly mining, tourism, infrastructure investments, and manufacturing—while ongoing reforms aim to enhance diversification and private sector participation. The Bank of Tanzania's prudent monetary management and reserve accumulation are likely to support exchange rate stability and resilience against global uncertainties. However, risks such as potential political transitions following the 2025 elections, commodity price volatility, and climate-related challenges could moderate the pace if not managed effectively.
Projected Key Economic Indicators for 2026
The table below summarizes major forecasts from reputable sources (as of late 2025 data), compared to 2025 estimates for context.
Indicator
Projected Value (2026)
2025 Estimate/Actual
Change/Trend
Notes/Source Context
Real GDP Growth
6.1–6.3%
6.0–6.3%
Stable to slight acceleration
IMF: 6.3%; Tanzania government target: 6.1%; driven by fixed investments, exports, and reforms
Headline Inflation
~3.5%
~3.3–3.4%
Mild increase
Expected to stay within BoT's 3–5% target; supported by stable food/energy prices and tight policy
Foreign Exchange Reserves
Adequate (>4.5–5 months import cover)
~4.7 months (end-2025 est.)
Continued improvement
Bolstered by gold/tourism exports and inflows; aligns with EAC benchmarks
Gold Exports
Sustained high levels (potentially >USD 4 billion)
USD 4.3–4.43 billion
Stable growth
Dependent on global prices and production; mining remains dominant
Emphasis on LNG projects, ports/railways, and private sector credit expansion; East Africa regional leader at ~5.9% average growth
Overall, the 2026 outlook reinforces Tanzania's path toward upper-middle-income status, with export-led growth and reserve buildup (as seen in the BoT's 2025 balance sheet trends) providing a solid foundation. Successful implementation of structural reforms, climate-resilient investments, and fiscal prudence will be critical to achieving these projections and mitigating downside risks.
Conclusion
The Bank of Tanzania's November 2025 balance sheet paints an optimistic picture of the nation's macroeconomic health, with significant asset growth, diversified reserves (particularly in gold), and strengthened equity signaling enhanced resilience and capacity for development financing. Tanzania's 2025 performance—marked by record export earnings, low and stable inflation, private sector credit expansion, and GDP growth around 6%—has been anchored by effective central bank policies and sectoral strengths in mining and tourism, providing a buffer against external risks while fostering inclusive progress.
As the economy transitions into 2026, projections of 6.1–6.3% GDP growth, inflation remaining around 3.5%, and sustained reserve adequacy offer a compelling outlook for continued momentum. Key opportunities lie in advancing structural reforms, climate-resilient investments, and diversification efforts to mitigate risks such as commodity price fluctuations or global slowdowns. With the BoT's prudent stewardship and export-led drivers intact, Tanzania is well-positioned to build on its 2025 gains, driving sustainable development, job creation, and regional leadership in the years ahead.
In May 2025, credit to the private sector in Tanzania grew by 17.1%, a notable increase from 14.8% in April, reflecting robust lending activity (Bank of Tanzania, 2025). This growth, particularly in agriculture (29.8%), building and construction (27.9%), and transport and communication (25.6%), with personal loans comprising 35.7% of total credit, suggests a dynamic credit market. However, the extent to which this expansion supports economic development hinges on whether it fuels productive investments that enhance output, employment, and infrastructure, or if it is primarily absorbed by consumption, which may offer short-term benefits but limited long-term growth. This analysis examines the allocation of credit, its impact on key sectors, and its implications for sustainable economic development, drawing on the provided document and broader economic context.
Credit Growth Overview:
Total Credit Growth: Private sector credit grew by 17.1% in May 2025, up from 14.8% in April 2025, indicating increased liquidity and banking sector confidence (Bank of Tanzania, 2025). This aligns with the Bank of Tanzania’s monetary policy stance, maintaining the Central Bank Rate at 6% to support economic activity amid global uncertainties.
Sectoral Distribution:
Agriculture: Credit growth reached 29.8%, reflecting significant investment in a sector critical to Tanzania’s economy, which employs about 65% of the workforce and contributes roughly 25% to GDP (World Bank, 2023).
Building and Construction: A 27.9% growth rate suggests strong investment in infrastructure, a key driver of economic development through job creation and improved connectivity.
Transport and Communication: With 25.6% growth, this sector benefits from credit supporting logistics and digital infrastructure, crucial for trade and innovation.
Personal Loans: Dominating at 35.7% of total credit, personal loans indicate a significant portion of credit is directed toward individual consumption or small-scale activities.
Monetary and Financial Context:
Money Supply: Broad money (M2) growth supports credit expansion, with interbank cash market transactions rising to TZS 3,267 billion in May 2025 from TZS 2,111 billion in April, reflecting ample liquidity.
Interest Rates: The weighted average lending rate was 15.18% in May 2025, with a narrowed interest rate spread of 6.24% (down from 7.61% in May 2024), indicating improved credit affordability.
External Sector: A narrowing current account deficit to USD 2,117.5 million in May 2025, driven by strong export performance (e.g., gold and cashew nuts), supports economic stability, enabling banks to extend credit without external pressures.
Productive Investment vs. Consumption
Productive Investment:
Agriculture: The 29.8% credit growth in agriculture is promising, as it supports a sector vital for food security and rural livelihoods. Investments in irrigation, mechanization, or agro-processing could enhance productivity, reduce import reliance, and boost exports (e.g., cashew nuts, which contributed to a USD 578.5 million export increase in May 2025). However, the effectiveness depends on whether credit reaches smallholder farmers or is concentrated in large agribusinesses, as smallholders dominate Tanzania’s agricultural landscape.
Building and Construction: The 27.9% growth supports infrastructure projects, aligning with the government’s 2025/26 budget priorities for development spending (TZS 1,281.6 billion in April 2025). This can stimulate job creation and economic multipliers, enhancing long-term growth. For instance, infrastructure investments improve transport networks, reducing costs for businesses and supporting export growth (e.g., USD 5,360 million in foreign exchange reserves).
Transport and Communication: The 25.6% credit growth facilitates logistics and digital infrastructure, critical for Tanzania’s integration into regional markets like the EAC. Investments here could enhance trade efficiency, as evidenced by the improved current account surplus in Zanzibar (USD 396.2 million).
Consumption-Driven Credit:
Personal Loans: At 35.7% of total credit, personal loans dominate, suggesting a significant portion of credit is used for consumption or small-scale entrepreneurial activities. While personal loans can support micro-businesses or smooth household consumption, excessive reliance risks diverting funds from productive sectors. High consumption-driven borrowing may also strain repayment capacity, given the 15.18% lending rate, potentially increasing non-performing loans if incomes do not keep pace with inflation (3.2% in May 2025).
Risk of Over-Leveraging: The high share of personal loans raises concerns about debt sustainability, especially for informal sector workers (~80% of the workforce), who lack stable incomes. This could limit the transformative impact of credit on economic development if funds are not channeled into income-generating activities.
Economic Development Impacts:
Positive Contributions: Credit growth in agriculture, construction, and transport supports structural transformation. For example, agricultural credit aligns with government priorities to boost food production, potentially mitigating food inflation (3.9% in Zanzibar, p. 16). Infrastructure investments enhance connectivity, supporting Tanzania’s role as a regional trade hub. The narrowed current account deficit and stable reserves (4.2 months of import cover) provide a conducive environment for sustained credit growth.
Limitations: The dominance of personal loans suggests limited depth in productive investment. Without targeted policies to channel credit into high-impact sectors (e.g., manufacturing, which has lower credit growth), the economic multiplier effects may be constrained. Additionally, high lending rates (15.18%) could deter long-term investments in capital-intensive projects, limiting job creation and GDP growth.
External Context: Global uncertainties, such as geopolitical tensions and trade tariffs noted in the document, could dampen investor confidence, potentially reducing the effectiveness of credit in driving export-led growth. However, rising gold exports and stable oil prices provide some buffer.
Conclusion
Credit growth to the private sector in Tanzania, at 17.1% in May 2025, significantly supports economic development through substantial allocations to agriculture (29.8%), building and construction (27.9%), and transport and communication (25.6%). These sectors drive productivity, infrastructure, and trade, aligning with government priorities and contributing to economic stability, as evidenced by a narrowing current account deficit and robust reserves. However, the dominance of personal loans (35.7%) suggests a significant portion of credit is absorbed by consumption, potentially limiting long-term growth if not directed toward productive uses. To maximize economic development, policies should incentivize credit allocation to high-impact sectors like manufacturing and ensure smallholder farmers access agricultural loans, while managing risks of over-leveraging in the informal sector. This balanced approach can enhance the transformative impact of credit growth on Tanzania’s economy.
Below is a table summarizing key figures related to credit growth to the private sector in Tanzania and its implications for economic development, based on the provided Bank of Tanzania document (2025070510552448.pdf) and additional context from the previous analysis. The table focuses on critical metrics related to credit growth, sectoral allocation, and broader economic indicators to highlight their role in supporting economic development.
Metric
Value
Notes
Private Sector Credit Growth
17.1% (May 2025)
Up from 14.8% in April 2025, reflecting robust lending activity.
Agriculture Credit Growth
29.8% (May 2025)
Supports a sector employing ~65% of workforce, ~25% of GDP (World Bank).
Building & Construction Credit Growth
27.9% (May 2025)
Fuels infrastructure, aligning with TZS 1,281.6B development spending.
Transport & Communication Credit Growth
25.6% (May 2025)
Enhances logistics and digital infrastructure, key for trade.
Stable within 3–5% target, supports credit affordability.
Food Inflation (Zanzibar)
3.9% (May 2025)
Eased from 4.1% in April, due to improved food supply.
Informal Sector Workforce
~80%
Limits wage adjustments, increases reliance on credit for consumption.
Notes:
Credit Growth: The 17.1% growth in private sector credit (May 2025) reflects strong banking sector activity, supported by a stable monetary policy (Central Bank Rate at 6%) and increased liquidity (TZS 3,267B in interbank transactions).
Sectoral Impact: High growth in agriculture (29.8%), building and construction (27.9%), and transport and communication (25.6%) supports productive investments, enhancing food security, infrastructure, and trade connectivity. However, personal loans (35.7%) suggest significant consumption-driven borrowing, which may limit long-term economic benefits.
Economic Stability: A narrowed current account deficit (USD 2,117.5M) and robust reserves (USD 5,360M, 4.2 months of import cover) provide a stable environment for credit expansion. Stable inflation (3.2%) and declining food inflation in Zanzibar (3.9%) support purchasing power.
Challenges: The dominance of personal loans and high lending rates (15.18%) may constrain productive investment, particularly in manufacturing, and pose risks of over-leveraging in the informal sector (~80% of workforce).
Source: Figures are primarily from the Bank of Tanzania document (pages noted), with workforce and GDP data from World Bank (2023).
This table consolidates key figures to illustrate the extent to which credit growth supports economic development, highlighting both productive investments and consumption-driven challenges.
The Tanzania Revenue Authority (TRA) achieved significant milestones in tax collection during the 2024/25 fiscal year (July 2024 – June 2025), reflecting enhanced administrative efficiency, taxpayer compliance, and technological advancements.
Key Highlights
Total Collection: TZS 32.26 trillion, exceeding the target of TZS 31.05 trillion (103.9% performance rate).
Annual Growth: 16.7% increase from TZS 27.64 trillion in 2023/24.
Quarter 4 (April – June 2025): Collected TZS 8.22 trillion against a target of TZS 7.84 trillion (104.8% performance, 15.8% growth from Q4 2023/24).
Monthly Achievements:
Consistently surpassed monthly targets for 12 consecutive months, a record since TRA’s establishment in 1996.
Average monthly collection: TZS 2.69 trillion, the highest in TRA history.
Peak collection: TZS 3.58 trillion in December 2024.
Major Milestones:
Exceeded the annual target for the first time since 2015/16.
Recorded the highest single-month collection in December 2024.
Monthly Collection Breakdown (FY 2024/25)
Month
2023/24 Collection (TZS Trillion)
2024/25 Target (TZS Trillion)
2024/25 Actual (TZS Trillion)
Performance (%)
Growth (%)
July
1.94
2.25
2.35
104.5%
21.1%
August
2.01
2.30
2.42
105.5%
20.4%
September
2.62
2.88
3.02
104.7%
15.0%
October
2.15
2.47
2.65
107.4%
23.6%
November
2.14
2.42
2.50
103.4%
16.6%
December
3.05
3.46
3.58
103.3%
17.3%
January
2.12
2.38
2.42
101.7%
13.8%
February
2.02
2.26
2.27
100.2%
12.2%
March
2.49
2.79
2.84
101.9%
14.2%
April
1.97
2.22
2.27
102.1%
15.3%
May
2.22
2.44
2.53
103.8%
14.1%
June
2.91
3.19
3.42
107.4%
17.5%
TOTAL
27.64
31.05
32.26
103.9%
16.7%
Revenue Forecast for FY 2025/26
The TRA has set a target of TZS 36.066 trillion for the 2025/26 fiscal year, reflecting an anticipated growth of 11.8% from 2024/25. This ambitious target is supported by:
Continued taxpayer education and compliance initiatives.
Deployment of modern tax systems (IDRAS, TANCIS).
Strengthened cooperation with business communities.
Enhanced staff performance monitoring and accountability.
Projected Monthly Targets for 2025/26
Month
Projected Target (TZS Trillion)
Projected Growth Rate (%)
July
2.55
8.5%
August
2.65
9.5%
September
3.30
9.3%
October
2.90
9.4%
November
2.75
10.0%
December
4.00
11.7%
January
2.70
11.6%
February
2.50
10.1%
March
3.10
9.2%
April
2.50
10.1%
May
2.85
12.7%
June
3.90
14.0%
TOTAL
36.07
11.8%
Implications for Tanzania’s Economic Development (2025/26 Budget)
The TRA’s strong revenue performance in 2024/25 and the optimistic forecast for 2025/26 are critical for funding Tanzania’s TZS 56.49 trillion budget for 2025/26, which aims to achieve 6% GDP growth and aligns with the Third Five-Year National Development Plan (2021/22–2025/26) and Vision 2025. Below are the key implications for economic development:
1. Strengthened Fiscal Capacity
Domestic Revenue Mobilization: The TRA is projected to collect TZS 36.066 trillion in 2025/26, contributing significantly to the budgeted TZS 38.9 trillion in domestic revenues (70.1% of the total budget). This reduces reliance on external financing, which is expected to contribute TZS 16.02 trillion (including grants and loans).
Fiscal Discipline: The TRA’s consistent overperformance (103.9% in 2024/25) and a controlled budget deficit (TZS 30 billion in January 2025) reflect improved tax administration and fiscal management, enabling sustainable funding for development projects.
Reduced External Debt Dependency: With domestic revenue covering over 70% of the budget, Tanzania is moving toward greater self-reliance, despite an external debt of $32.89 billion in September 2024.
2. Support for Flagship Infrastructure Projects
The TRA’s revenue surplus supports the completion of strategic projects outlined in the 2025/26 budget, including:
Standard Gauge Railway (SGR): Enhancing transport infrastructure to boost trade and regional connectivity.
Julius Nyerere Hydropower Project (2,115 MW): Increasing electricity production to support industrial growth.
Ruhudji (358 MW) and Rumakali (222 MW) Hydropower Plants: Expanding energy access for economic activities.
Liquefied Natural Gas (LNG) Project: Positioning Tanzania as a regional energy hub.
John Magufuli Bridge (Kigongo-Busisi): Improving domestic and cross-border connectivity.
These projects drive industrial capacity, competitiveness, and job creation, aligning with the budget’s theme of “Inclusive Economic Transformation through Strengthening Domestic Revenue Mobilization.”
3. Economic Growth and Job Creation
GDP Growth: The 2025/26 budget targets 6% GDP growth, building on 5.5% growth in 2024 (TZS 156.6 trillion GDP). The TRA’s revenue performance supports investments in key sectors like agriculture (26% of GDP), construction (13%), and mining (10%), which are critical for economic expansion.
Job Creation: The budget aims to create employment opportunities, with 41,117 jobs projected from $3.7 billion in registered investment projects (January–May 2025). Strong tax revenue enables funding for human capital development, including education and health initiatives.
Private Sector Growth: Improved tax compliance and a 20% annual increase in private sector credit indicate robust business activity, further supported by tax reforms like VAT exemptions for farmers, producers, and clean energy.
4. Social and Human Capital Development
Health and Education: The 2025/26 budget allocates funds for training 28,000 health workers, expanding specialist services to 9 referral hospitals, and revitalizing pharmaceutical production (e.g., ARV manufacturing in Arusha). Education investments focus on skills development to support industrialization.
Elections and Social Services: Significant allocations for the 2025 general elections and social welfare programs ensure inclusive growth, funded primarily through domestic revenue.
5. Digital and Technological Advancements
Tax Systems: The deployment of modern systems like IDRAS and TANCIS has enhanced tax collection efficiency, contributing to the TRA’s record performance. These systems are expected to sustain revenue growth in 2025/26.
Digital Economy: The budget supports ICT growth (projected at 13.5% by 2026), including over 400 communication towers in rural areas and the National Digital Economy Strategic Framework 2024–2034, fostering digital inclusivity and economic transformation.
6. Challenges and Risks
Tax Base Expansion: Tanzania’s tax-to-GDP ratio (14.9% in 2024/25) remains below the Sub-Saharan Africa average (18.6%), indicating a need to broaden the tax base, particularly in agriculture and the informal economy.
Global and Regional Risks: Potential global economic slowdown, geopolitical tensions, and the 2025 general elections may dampen investment and growth.
The TRA’s exceptional performance in 2024/25, with a record-breaking TZS 32.26 trillion collected, underscores Tanzania’s progress in domestic revenue mobilization. The forecasted TZS 36.066 trillion for 2025/26 will play a pivotal role in funding the TZS 56.49 trillion budget, supporting infrastructure, industrialization, and social development. By reducing reliance on external financing and fostering inclusive growth, Tanzania is poised to achieve its 6% GDP growth target and advance toward Vision 2050. However, addressing challenges like the narrow tax base and global economic uncertainties will be critical to sustaining this trajectory.
