Digital loans have experienced significant growth in Tanzania, driven by mobile technology, increased phone ownership, and partnerships between banks, microfinance institutions, and mobile network operators (MNOs).
Key Statistics
Total Number of Digital Loan Accounts:
The number of digital loan accounts in Tanzania skyrocketed by 198% from 32.09 million in 2022 to 95.89 million in 2023.
This dramatic increase highlights a growing trend of digital borrowing, especially among low-income and rural populations who find traditional banking inaccessible.
Amount of Digital Credit Issued:
The total amount of digital credit issued in Tanzania surged from TZS 26.79 billion in 2022 to TZS 126.03 billion in 2023, marking a 370% increase.
This indicates that while the number of loans has grown significantly, the total value of loans issued has also risen, suggesting an increasing demand for larger loans.
Demographic Trends:
Men represent 66.5% of all digital loan borrowers, while women account for 33.5%. However, the number of women accessing digital loans is steadily increasing, indicating greater financial empowerment among women.
Youth and young adults (primarily those aged 18–35) make up a large proportion of digital loan borrowers, as they are more likely to use mobile phones and digital financial services.
Active Mobile Money Accounts:
The increase in mobile money accounts (from 38.34 million in 2022 to 51.72 million in 2023) has contributed to the growth of digital loan services, as digital loan products are typically linked to mobile wallets.
The growth in mobile money accounts and the availability of National Identification Numbers (NINs) have made it easier for more people to access mobile financial services.
Key Drivers of Growth
Technology and Mobile Penetration:
The expansion of 3G and 4G network coverage and the increased availability of smartphones have made digital loans more accessible to Tanzanians, particularly in rural areas.
The ease of instant loans via mobile platforms has allowed users to access credit without needing a bank account or physical collateral.
Partnerships between Banks and MNOs:
Many financial institutions have partnered with mobile network operators (MNOs) to offer digital loans. These partnerships leverage MNOs' extensive mobile money networks, enabling quicker disbursement and repayment of loans.
Artificial Intelligence (AI) is used to assess the creditworthiness of borrowers, allowing for faster loan approval processes based on transaction history and mobile phone usage.
Government Support:
Regulatory changes by the Bank of Tanzania (BoT) and other financial authorities have helped create a favorable environment for digital lending, supporting the development of mobile loan platforms and enhancing financial inclusion.
Impact of Digital Loans
Financial Inclusion:
Digital loans have significantly improved financial inclusion by providing access to credit for underserved populations, particularly in rural areas where traditional banks have limited reach.
The increased access to instant loans has enabled individuals to meet urgent financial needs, such as healthcare, education, or emergency expenses.
Economic Growth:
By giving small businesses and individuals access to capital, digital loans contribute to economic activity, especially for MSMEs and entrepreneurs who may otherwise struggle to access credit from traditional financial institutions.
Challenges and Opportunities
Challenges:
Despite their growth, digital loans often carry high-interest rates, which can burden borrowers, especially those in low-income segments.
There is also concern over the sustainability of digital lending models, as some borrowers may struggle to repay loans on time, leading to over-indebtedness.
Opportunities:
The growth of digital credit presents opportunities for further product innovation in micro-lending, especially targeting women and youth.
There is potential for regulatory improvements to balance the rapid growth of digital lending with consumer protection to ensure long-term stability and sustainability.
Conclusion
The surge in digital loans in Tanzania, with a 198% increase in loan accounts and a 370% rise in the value of loans, demonstrates the country's rapid adoption of mobile financial services. While digital loans have opened up new opportunities for financial inclusion, they also present challenges related to affordability and long-term sustainability. Continued innovation, coupled with regulatory oversight, will be key to maximizing the benefits of digital lending in Tanzania's evolving financial landscape.
Between 2019 and 2023, Tanzania's financial landscape experienced remarkable growth, with total financial access points increasing by 130%, from 609,956 in 2019 to 1,402,609 in 2023. This expansion was driven by a 116% rise in mobile money agents (from 573,444 to 1,240,106) and a 365% growth in bank agents (from 28,358 to 106,176). The country’s financial inclusion rate improved from 65% in 2017 to 76% in 2023, showcasing the success of digital innovations and policy reforms under the National Financial Inclusion Framework. This growth underscores Tanzania's commitment to bridging the financial access gap, particularly in underserved areas.
Financial Services Providers Landscape in Tanzania
Tanzania's financial services landscape is diverse and rapidly growing, driven by digital innovations and regulatory improvements. The sector comprises banking institutions, microfinance, insurance, capital markets, and payment service providers:
Access to Financial Services
Banking Services:
Number of bank agents grew from 28,358 in 2019 to 106,176 in 2023.
Banking access points increased to 107,238 in 2023, driven by reforms in agent banking.
Microfinance Institutions (MFIs):
Access points reached 51,253 in 2023, marking a 31% annual growth.
Community Microfinance Groups (CMGs) dominate with 48,659 access points, reflecting a formalization trend.
Payment Services:
Mobile money agents grew by 19.4% to 1.24 million in 2023.
Mobile money accounts increased by 34.9% to 51.72 million.
Usage of Financial Services
Savings:
Banking sector savings reached TZS 6.99 trillion, an 18.1% increase.
Savings accounts in SACCOs decreased in value to TZS 870 billion, as some members preferred borrowing.
Credit:
Total bank loans grew by 24.4% to TZS 33.10 trillion.
SACCOs' loans amounted to TZS 1.12 trillion, a 3.7% increase.
Insurance:
Policyholders increased by 94.4% to 7.68 million, mainly due to mandatory motor insurance and health coverage expansion.
Capital Markets:
Investors in securities increased by 12.5% to 907,969, supported by technology-enabled platforms.
Growth Drivers
Digital Financial Services: The rise of mobile money and online platforms improved accessibility and efficiency.
Policy Frameworks: The National Financial Inclusion Framework (2023-2028) prioritized underserved populations.
Regulatory Enhancements: New guidelines fostered innovations, such as digital insurance platforms and microfinance formalization.
Government Programs: Local Government Authority loans provided TZS 24.02 billion to women and TZS 19.92 billion to youth in 2023.
Total Number of Financial Access Points in Tanzania (2019–2023)
The number of financial access points in Tanzania grew significantly between 2019 and 2023, driven by expansion across banking, microfinance, insurance, and payment systems:
Overall Growth
In 2019, Tanzania had 609,956 financial access points.
By 2023, this number increased to 1,402,609, representing a 130% growth over the period.
Yearly Breakdown of Access Points
Year
Total Financial Access Points
Annual Growth (%)
2019
609,956
-
2020
798,790
30.97%
2021
973,245
21.85%
2022
1,215,033
24.84%
2023
1,402,609
15.44%
Sector-wise Contribution
Banking Services:
Grew from 29,371 access points in 2019 to 107,238 in 2023.
Bank agents contributed most to this increase, quadrupling during the period.
Microfinance Services:
Increased from 6,241 access points in 2019 to 53,371 in 2023, driven by the formalization of Community Microfinance Groups (CMGs).
Insurance Services:
Access points rose from 795 in 2019 to 1,495 in 2023, a 88% growth, fueled by digital platforms and bancassurance agents.
Payment Systems (Non-Bank):
Dominated the landscape, growing from 573,444 access points in 2019 to 1,240,106 in 2023, representing 116% growth.
Mobile money agents were the largest contributors.
Capital Markets Services:
Modest growth from 91 access points in 2019 to 380 in 2023, reflecting a focus on investment advisory and fund management.
Social Security Services:
Grew slightly from 14 access points in 2019 to 19 in 2023, limited by the niche nature of this sector.
Key Drivers of Growth
Digital Transformation: Mobile money platforms and digital payment systems rapidly increased access.
Policy and Regulation: The implementation of the National Financial Inclusion Framework (NFIF) facilitated formalization and innovation.
Public-Private Partnerships: Collaboration with stakeholders such as banks, microfinance institutions, and insurers expanded reach.
Implications
The steady increase in financial access points reflects Tanzania's progress in financial inclusion, ensuring more adults live within a 5 km radius of financial services (89% in 2023, up from 86% in 2017).
Insights from Tanzania's Financial Services Providers Landscape (2023) and Financial Access Points (2019–2023)
1. Strong Progress in Financial Inclusion
The rapid growth in financial access points and the diversification of financial service providers illustrate Tanzania's consistent strides in financial inclusion. The financial inclusion rate increased from 65% in 2017 to 76% in 2023, demonstrating that more Tanzanians are accessing formal financial services.
2. Dominance of Digital Financial Services
The exponential growth in mobile money agents (from 573,444 in 2019 to 1,240,106 in 2023) highlights how digital financial services dominate the financial landscape.
Digital innovations, such as mobile money, are bridging the gap in rural and underserved areas, making financial services more accessible and affordable.
3. Role of Policy and Regulation
The implementation of frameworks like the National Financial Inclusion Framework (NFIF-3, 2023–2028), along with regulatory reforms for digital platforms, insurance, and microfinance, has created an enabling environment for growth.
This alignment between public and private stakeholders reflects a focused approach to tackling barriers to financial access.
4. Significant Growth in Banking Services
The growth in banking agents (from 28,358 in 2019 to 106,176 in 2023) shows that agent banking reforms have effectively decentralized banking, bringing services closer to people, especially in rural areas.
5. Increased Focus on Underserved Segments
Initiatives targeting women, youth, MSMEs, and smallholder farmers have driven tailored products, like women-friendly savings accounts and micro-loans, showcasing a shift towards inclusive financial services.
6. Opportunities in Microfinance and Capital Markets
The formalization of Community Microfinance Groups (CMGs) and the growth of capital markets (e.g., fund managers and collective investment schemes) indicate untapped potential for rural financing and investment.
7. Persistent Challenges
Despite improvements, certain challenges persist:
Social security services access points remain limited (only 19 access points in 2023).
Urban-rural disparities still exist, as infrastructure in rural areas lags behind urban centers.
Low uptake of advanced financial services like pensions and insurance, indicating a need for more public awareness and tailored products.
8. Economic and Social Impacts
Economic Growth: With credit values increasing by 24.4% in banks and 3.7% in SACCOs in 2023, the financial sector has become a key driver of economic growth by mobilizing savings and enabling trade.
Social Benefits: Financial inclusion efforts have empowered previously underserved populations, enhancing their ability to save, invest, and access credit.
Key Takeaways
Growth with Innovation: The financial services landscape in Tanzania is becoming increasingly diversified, with digital financial services leading the charge.
Policy as a Catalyst: The alignment of policy, innovation, and private-sector initiatives ensures sustainable growth in financial inclusion.
Targeted Efforts are Essential: Continued focus on underserved segments like rural populations and MSMEs is crucial for equitable economic growth.
In September 2024, Tanzania's bank lending rate rose slightly to 12.92% from 12.79% in August, reflecting cautious adjustments in monetary policy. This rate, slightly below the long-term average of 13.09%, highlights the Bank of Tanzania's efforts to manage inflation and stabilize the economy while maintaining a moderately high cost of borrowing for businesses and consumers.
1. Current Trends (2024)
In September 2024, the bank lending rate increased to 12.92%, up slightly from 12.79% in August 2024.
This indicates a monthly increase of 0.13 percentage points, reflecting a tightening of credit conditions or adjustments to monetary policy.
2. Historical Averages (2003-2024)
Over the last 21 years, the average bank lending rate in Tanzania has been 13.09%.
This average suggests that the current lending rate of 12.92% is slightly below the long-term trend, signaling a relatively moderate borrowing cost in the historical context.
3. Extreme Values
Highest Rate: The lending rate peaked at 17.91% in September 2017, likely due to monetary tightening or inflation control measures.
Lowest Rate: The lending rate hit a record low of 7.53% in March 2004, reflecting favorable credit conditions and possibly expansive monetary policy.
4. Insights from Changes
The recent uptick in 2024 may indicate cautious monetary policy adjustments, aiming to balance economic growth with inflation control.
Historical fluctuations reflect responses to various economic conditions, including:
Inflation trends: High lending rates often align with inflationary pressures.
Monetary policy stance: Changes in the Central Bank’s policies to control liquidity and stabilize the Tanzanian shilling.
Economic growth phases: Lower rates during growth-supportive periods and higher rates during economic cooling.
5. Implications for Borrowers and Businesses
At 12.92%, borrowing costs remain significant for businesses and consumers.
Compared to the record high of 17.91%, the current rate offers some relief, but it’s still far from the record low of 7.53%.
The bank lending rate data for Tanzania tells several important economic and monetary policy stories:
1. Monetary Policy Trends
Current Tightening: The slight increase from 12.79% to 12.92% in September 2024 suggests that the Bank of Tanzania is either:
Managing inflation risks.
Controlling excessive credit growth.
This indicates a cautious tightening or stabilization phase in monetary policy.
2. Credit Environment
Borrowing Costs: A lending rate of 12.92% reflects a relatively high cost of borrowing, which can:
Limit small businesses and consumers’ ability to access affordable loans.
Compared to historical lows (7.53% in 2004), current rates make credit more expensive, potentially affecting economic activity.
3. Historical Context
Long-Term Average (13.09%):
The current rate is slightly below the historical average, suggesting that borrowing conditions are moderately stable but not overly restrictive.
Extreme Variations:
The record high (17.91% in 2017) occurred during a period of high inflation and stringent monetary policy.
The record low (7.53% in 2004) reflects a time of looser monetary policy aimed at boosting economic growth.
4. Implications for Economic Growth
For Businesses:
High lending rates increase the cost of capital, particularly for sectors dependent on bank loans, such as SMEs and agriculture.
Limits expansion plans and investment in capital-intensive projects.
For Consumers:
Higher rates increase borrowing costs, impacting personal loans, mortgages, and spending power.
5. Signals to Stakeholders
To Policymakers: The Bank of Tanzania might be balancing inflationary pressures against the need to support economic growth. Maintaining rates slightly below the long-term average reflects a careful approach.
To Investors: A moderately high lending rate suggests a relatively stable financial system, but caution is needed in sectors sensitive to borrowing costs.
To the Public: Fluctuations in rates can affect consumer confidence, especially if they expect prolonged high borrowing costs.
As of September 2024, Tanzania's total external debt reached USD 32.89 billion, accounting for 73% of the country’s total national debt. The central government held the largest share of external debt at USD 25.43 billion (78.1%), with funds directed toward critical sectors like transport (21.5%) and social welfare (20.8%). Domestically, the government owed TZS 32.62 trillion, with Treasury bonds dominating at 78.9%. Despite strategic investments, reliance on the USD (67.4% of external debt) and limited funding for agriculture (5.1%) and tourism (1.6%) pose challenges to debt sustainability and inclusive economic growth.
1. External Debt
Key Figures
Total External Debt Stock (Sept 2024): USD 32,890.0 million.
Proportion of National Debt: 73%.
Main Components:
Disbursed Outstanding Debt: USD 31,425.6 million.
Undisbursed Debt: USD 5,042.7 million.
Debt Stock by Borrowers
Central Government: USD 25,428.6 million (78.1% of external debt).
Private Sector: USD 5,993.2 million (21.9% of external debt).
Public Corporations: USD 3.8 million (negligible share).
Use of Funds (Disbursed Outstanding Debt)
Transport and Telecommunications: 21.5% – Largest allocation, highlighting the government's priority on improving connectivity and mobility.
Social Welfare and Education: 20.8% – Significant focus on human capital development.
Balance of Payments Support: 17.9% – Indicates reliance on external financing for stabilizing the country's foreign exchange reserves.
Energy and Mining: 14.8% – Focus on infrastructure for energy and resource exploitation.
Tourism: 1.6% – Surprisingly low given its economic importance.
Real Estate and Construction: 4.8%.
Other Uses: 5.8%.
Currency Composition
US Dollar: 67.4% – Reflects high exposure to exchange rate fluctuations against the USD.
Euro: 16.6%.
Chinese Yuan: 6.3%.
Other Currencies: 9.7%.
2. Internal (Domestic) Debt
Key Figures
Total Domestic Debt Stock (Sept 2024): TZS 32,615.7 billion.
Month-on-Month Change: Decreased by TZS 144.5 billion.
Main Instruments:
Treasury Bonds: 78.9% – Dominates domestic debt instruments, preferred for their longer maturity periods.
Domestic Debt by Creditor
Commercial Banks: 29.7% (TZS 9,678.8 billion) – Largest creditors, showing banking sector's key role in funding government activities.
Bank of Tanzania: 20.5% (TZS 6,696.3 billion) – Central bank’s significant share indicates monetary policy alignment.
Pension Funds: 27.6% (TZS 8,991.4 billion) – Reflects government reliance on long-term funds.
Insurance Companies: 5.8% (TZS 1,904.2 billion).
BOT’s Special Funds: 1.2% (TZS 389.0 billion).
Others: 15.2% (TZS 4,956.0 billion) – Includes various smaller creditors.
Insights
Debt Composition: External debt forms a significant majority (73%), exposing the economy to foreign exchange risks, especially given the dominance of USD (67.4%).
Focus Areas of Debt Use: Prioritization of transport, telecommunications, social services, and energy aligns with Tanzania's development goals, though agriculture and tourism receive relatively smaller allocations.
Domestic Financing: Treasury bonds dominate, with commercial banks and pension funds as major participants, reflecting a stable domestic borrowing market.
The key insights into Tanzania's fiscal and economic dynamics:
1. Heavy Reliance on External Debt
External Borrowing: Makes up 73% of total debt, indicating significant dependency on international sources for financing development projects and budgetary needs.
Risks: High exposure to currency exchange rate fluctuations, especially with 67.4% of external debt denominated in USD. Any depreciation of the Tanzanian shilling could increase the cost of servicing the debt.
2. Focused Use of Funds
Priority Sectors:
Transport, telecommunications, and social welfare (education and health) receive a combined 42.3% of external debt funding. This reflects strategic efforts to improve infrastructure and human capital.
Energy and mining account for 14.8%, essential for supporting industrialization and reducing power shortages.
Underfunded Areas:
Agriculture (5.1%) and tourism (1.6%) receive smaller shares, despite their significance in Tanzania's GDP and employment. This could suggest underprioritization of these critical sectors or reliance on other forms of financing for them.
3. Dominance of Treasury Bonds in Domestic Debt
Treasury bonds constitute 78.9% of domestic debt, reflecting:
A preference for long-term instruments that reduce refinancing risks.
A relatively well-developed domestic bond market to absorb government debt.
Impact: Stable borrowing through domestic sources reduces reliance on volatile external sources but concentrates risk within the local financial system.
4. Key Domestic Creditors
Commercial Banks and Pension Funds: Together hold over 57% of domestic debt, showing reliance on institutional investors for funding.
Central Bank Role: The Bank of Tanzania (20.5%) plays a critical role in supporting government borrowing, reflecting alignment with monetary policy goals.
5. Debt Sustainability and Macro Risks
Short-Term Indicators: While the focus on productive sectors like transport and energy could boost long-term growth, the high proportion of debt (external and domestic) demands careful management to avoid repayment challenges.
Diversification Needs: The small allocation to tourism and agriculture may limit potential contributions from these sectors, which are key to inclusive growth and export earnings.
Debt Service Pressures: Heavy USD dependency can amplify costs if global financial conditions tighten (e.g., rising interest rates or strengthening dollar).
Key Messages
Opportunities: Investment in infrastructure, energy, and education positions Tanzania for future economic growth.
Challenges: Managing debt sustainability, diversifying financing sources, and balancing sectoral priorities remain crucial to minimize risks and maximize development impact.
TANROADS’ top 10 infrastructure projects, valued at 1,846.422 Billion TZS, highlight a strategic focus on transformative investments between 2015 and 2021. The J.P. Magufuli Bridge, the most expensive project at 592.609 Billion TZS, underscores the prioritization of specialized, high-impact infrastructure. While projects like BRT Phase 2 Lot 1 focus on urban mobility with a cost of 189.4 Billion TZS, rural connectivity is efficiently addressed through cost-effective roadworks such as Komanga-Kasinde LOT2 and Kasinde-Mpanda LOT3, averaging just 1.24 Billion TZS/km. These investments reflect TANROADS’ commitment to improving transport, trade, and regional integration across Tanzania.
1. J.P. Magufuli Bridge
Contract Value: 592.609 Billion TZS
Signing Date: 29/07/2019
Length: 3.20 km
Cost per km: ~185.19 Billion TZS/km
Key Features:
By far the most expensive project.
Nearly three times the cost of the second-highest project, due to its specialized infrastructure.
Likely serves as a critical link in Tanzania's national transportation network.
2. BRT Phase 2 Lot 1
Contract Value: 189.400 Billion TZS
Signing Date: 10/12/2018
Length: 20.30 km
Cost per km: ~9.33 Billion TZS/km
Purpose: Developing Bus Rapid Transit (BRT) infrastructure for Dar es Salaam, enhancing urban mobility.
3. Lusitu-Mawengi LOT2
Contract Value: 159.217 Billion TZS
Signing Date: 22/08/2016
Length: 50.00 km
Cost per km: ~3.18 Billion TZS/km
Key Features: Significant for regional connectivity.
4. Usesule-Komanga LOT1
Contract Value: 158.800 Billion TZS
Signing Date: 12/11/2017
Length: 117.67 km
Cost per km: ~1.35 Billion TZS/km
Key Features: Covers a substantial length, making it cost-efficient on a per-km basis.
5. Widening of Morogoro Road (Kimara–Kibaha)
Contract Value: 140.450 Billion TZS
Signing Date: 13/07/2018
Length: 19.20 km
Cost per km: ~7.32 Billion TZS/km
Type: Road widening project to reduce traffic congestion and enhance trade flow.
6. Komanga-Kasinde LOT2
Contract Value: 140.000 Billion TZS
Signing Date: 12/11/2017
Length: 112.80 km
Cost per km: ~1.24 Billion TZS/km
Key Features: Among the lowest per-kilometer costs, reflecting efficient use of resources.
7. Kasinde-Mpanda LOT3
Contract Value: 133.800 Billion TZS
Signing Date: 12/11/2017
Length: 108.00 km
Cost per km: ~1.24 Billion TZS/km
Key Features: Continues the connectivity corridor established by Komanga-Kasinde LOT2.
8. LOT 2: Ihumwa Dry Port – Matumbulu – Nala Section
Contract Value: 120.860 Billion TZS
Signing Date: 14/02/2020
Length: 60.00 km
Cost per km: ~2.01 Billion TZS/km
Purpose: Facilitating logistics and trade efficiency through improved connectivity.
9. Moronga-Makete LOT2
Contract Value: 110.446 Billion TZS
Signing Date: 06/02/2017
Length: 53.50 km
Cost per km: ~2.06 Billion TZS/km
10. LOT 1: Nala – Veyula – Mtumba – Ihumwa Dry Port Section
Contract Value: 100.840 Billion TZS
Signing Date: 10/07/2020
Length: 52.30 km
Cost per km: ~1.93 Billion TZS/km
Key Observations and Trends
1. Cost Distribution
Total Value: 1,846.422 Billion TZS
Share of Total Budget: Represents 56.6% of all TANROADS projects analyzed.
2. Timeline Pattern
2017–2020 Dominance:
2017: 3 projects
2018: 2 projects
2019: 1 project
2020: 2 projects
2016: 1 project
3. Project Types
Specialized Infrastructure: High costs for unique projects like J.P. Magufuli Bridge and BRT Phase 2.
Road Networks: Focus on connectivity and regional development.
Urban Development: Projects like road widening (Kimara–Kibaha) address traffic and urban transit.
4. Cost Efficiency
Highest Cost per km: J.P. Magufuli Bridge (~185.19 Billion TZS/km) reflects the complexity and engineering required.
Lowest Cost per km: Komanga-Kasinde LOT2 and Kasinde-Mpanda LOT3 (~1.24 Billion TZS/km) due to simpler terrains or resource efficiency.
5. Geographic Distribution
Projects cover diverse regions, from urban centers like Dar es Salaam to rural areas, ensuring equitable development.
The analysis of the top 10 TANROADS projects provides several insights into Tanzania's infrastructure priorities and investment strategy:
1. Strategic Investment Priorities
Focus on High-Impact Projects: Projects like J.P. Magufuli Bridge and BRT Phase 2 Lot 1 emphasize TANROADS’ focus on large-scale, transformative infrastructure to support national and regional connectivity.
Urban vs. Regional Development: Investments are balanced between improving urban transit systems (e.g., BRT, Morogoro Road) and expanding rural road networks (e.g., Komanga-Kasinde LOT2).
2. Cost Efficiency and Project Complexity
High Costs for Specialized Projects:
J.P. Magufuli Bridge (~185.19 Billion TZS/km) showcases the cost-intensive nature of engineering projects requiring advanced technology and materials.
Urban projects like BRT also exhibit higher costs due to land acquisition and urban constraints.
Economies of Scale in Road Projects: Projects like Komanga-Kasinde LOT2 and Kasinde-Mpanda LOT3 (~1.24 Billion TZS/km) demonstrate efficiency in rural road construction.
3. Timeline and Budget Focus
Peak Signing Period (2017–2020): Most projects were signed during this period, signaling:
A deliberate push for infrastructure growth.
Alignment with Tanzania’s economic development plans, such as industrialization and regional trade facilitation.
Budget Allocation Concentration: The top 10 projects account for 56.6% of the total budget, reflecting a focus on a few, impactful developments rather than dispersing resources.
4. Geographic Distribution
Equitable Development: Projects are geographically distributed to ensure all regions benefit:
Trade and Logistics: Projects like Ihumwa Dry Port – Matumbulu and Nala – Veyula – Mtumba enhance logistics, supporting Tanzania as a trade hub for East Africa.
Urban Transit: BRT projects reduce urban congestion, enabling more efficient movement of people and goods.
Regional Integration: Roads connecting rural areas (e.g., Kasinde-Mpanda) improve market access for farmers and small businesses.
TANROADS is executing a deliberate strategy to prioritize impactful, high-value projects that address both urban and rural needs. By focusing on cost efficiency, geographic inclusivity, and economic relevance, these projects significantly enhance Tanzania’s infrastructure, trade capacity, and economic growth potential.
Top 10 TANROADS Projects by Contract Value (2015–2021):
Rank
Project Name
Contract Value (Billion TZS)
Signing Date
Length (km)
Cost per km (Billion TZS)
Key Highlights
1
J.P. Magufuli Bridge
592.609
29/07/2019
3.20
185.19
Most expensive project, critical national transport link.
Urban road widening to reduce congestion and enhance trade flow.
6
Komanga-Kasinde LOT2
140.000
12/11/2017
112.80
1.24
Efficient road project supporting rural regions.
7
Kasinde-Mpanda LOT3
133.800
12/11/2017
108.00
1.24
Complements Komanga-Kasinde project to strengthen connectivity.
8
LOT 2: Ihumwa Dry Port – Matumbulu – Nala
120.860
14/02/2020
60.00
2.01
Improves logistics for trade efficiency.
9
Moronga-Makete LOT2
110.446
06/02/2017
53.50
2.06
Supports regional transport connectivity.
10
LOT 1: Nala – Veyula – Mtumba – Ihumwa
100.840
10/07/2020
52.30
1.93
Facilitates transport and logistics efficiency.
Key Observations:
Highest Value: J.P. Magufuli Bridge dominates at 592.609 Billion TZS with the highest cost per km.
Most Cost-Efficient: Komanga-Kasinde LOT2 and Kasinde-Mpanda LOT3, each at 1.24 Billion TZS/km.
Balanced Focus: Mix of urban projects (e.g., BRT, Morogoro Road) and rural road networks to boost connectivity and trade.
Between 2015 and 2021, TANROADS has strategically increased infrastructure investments, focusing on high-value projects to drive Tanzania's economic growth. Over this period, the total investment reached 3,264.173 Billion TZS, with a peak average project value of 119.40 Billion TZS per project in 2019. In 2021, despite only 4 projects, the average remained high at 81.41 Billion TZS per project, emphasizing a shift toward impactful, large-scale infrastructure that strengthens national and regional connectivity.
Peak Year: The highest average project value was in 2019, highlighting significant investments in high-value infrastructure.
Earlier Projects: Projects before 2015 had much lower average values, reflecting either smaller scopes or older pricing trends.
Consistent Growth: Recent projects (2020–2021) show a steady increase in total project values with relatively fewer but higher-value contracts.
The figures reveals key insights about TANROADS' project trends and priorities over the years:
1. Investment Growth Over Time
Increasing Project Value: The significant jump in total and average project values from earlier years (2015 and before) to recent years highlights growing investment in infrastructure. This may indicate:
Prioritization of large-scale projects.
Increased funding availability or enhanced budget allocation for road infrastructure.
Strategic Focus on High-Value Projects: 2019 was a peak year with the highest average project value, showing TANROADS' focus on impactful projects.
2. Recent Trends (2020–2021)
Fewer Projects, Higher Value: Despite fewer projects in 2021, the average value per project (81.41 Billion TZS) is high, reflecting a shift toward:
Strategic planning for major regional or national connectivity.
Enhanced quality and scope of individual projects.
Funding Efficiency: A reduced number of projects but higher value per project suggests a deliberate focus on impactful and sustainable infrastructure.
3. Earlier Years (2015 and Before)
Smaller Scopes and Budgets: Lower average project values likely indicate:
Smaller-scale or regionally focused road projects.
A phase of laying foundational infrastructure rather than ambitious nationwide connectivity goals.
4. Long-Term Trends
Focus on Key Transport Corridors: Many projects link significant trade hubs or regions, such as:
Kasulu-Manyovu for international trade with Burundi.
Nala-Dry Port, enhancing transport and logistics efficiency in central Tanzania.
Economic Growth Impact: Infrastructure development aligns with Tanzania’s broader economic goals, such as improving trade, reducing transport costs, and enabling regional integration.
What This Means
Economic Development: Increased spending on high-value projects reflects efforts to bolster Tanzania’s economic growth by improving transport and logistics.
Global Investment Attraction: The upward trend in project scope and value may help attract international investors, particularly for Public-Private Partnerships (PPPs).
Strategic Planning: Recent years demonstrate a focus on fewer, well-targeted projects to maximize infrastructure impact.
The top 10 projects by contract value.
Rank
Project Name
Year
Contract Sum (Bil TZS)
1
J.P. Magufuli Bridge
2019
592.609
2
BRT Phase 2 Lot 1
2018
189.400
3
LUSITU-MAWENGI LOT2
2016
159.217
4
USESULE-KOMANGA LOT1
2017
158.800
5
WIDENING OF MOROGORO ROAD (KIMARA –KIBAHA)
2018
140.450
6
KOMANGA KASINDE LOT2
2017
140.000
7
KASINDE-MPANDA LOT3
2017
133.800
8
LOT 2: IHUMWA DRY PORT – MATUMBULU – NALA SECTION
2020
120.860
9
LOT 1: NALA – VEYULA – MTUMBA – IHUMWA DRY PORT SECTION
2020
100.840
10
MORONGA-MAKETE LOT2
2017
110.446
Key observations:
The J.P. Magufuli Bridge is significantly more expensive than any other project
BRT Phase 2 Lot 1 is the second most expensive project
Most of these top 10 projects were signed between 2017-2020
Infrastructure projects (bridges, roads, and transit) dominate the highest-cost projects
Tanzania's banking sector demonstrated robust growth and stability in 2023, with total assets rising by 17.8% to TZS 54,396 billion, driven by increased deposits, borrowings, and retained earnings. Deposits surged by 16.9% to TZS 38,076.5 billion, reflecting heightened public confidence, while pre-tax profits jumped 63.5% to TZS 1,527.9 billion, bolstered by efficient operations and a growing loan portfolio. The sector's Non-Performing Loan (NPL) ratio improved to 4.4%, indicating stronger credit management, and its liquid assets-to-demand liabilities ratio stood at 28.8%, well above the regulatory minimum. These figures highlight the sector's resilience and its pivotal role in advancing Tanzania’s economic stability and financial inclusion.
1. Asset Growth and Structure
Total assets increased by 17.8% to TZS 54,396.0 billion from TZS 46,159.5 billion in 2022. This was primarily financed by increased deposits, borrowings, and retained earnings.
Asset composition:
Loans, advances, and overdrafts: 58.9% of total assets.
Investments in debt securities: 16.0%.
Cash and balances: 15.3%.
Earning assets accounted for 84.4% of total assets, growing by 20.3% to TZS 45,907.6 billion, highlighting effective utilization of resources in productive sectors.
2. Liabilities and Deposits
Total liabilities grew by 18.1% to TZS 46,316.7 billion.
Deposits increased by 16.9% to TZS 38,076.5 billion, with local currency deposits rising by 19.3% to TZS 24,241.0 billion, reflecting increased public trust in the banking system.
Borrowings rose by 18.5% to TZS 5,531.4 billion, further supporting growth initiatives.
3. Profitability
The sector's pre-tax profits surged by 63.5% to TZS 1,527.9 billion, up from TZS 934.4 billion in 2022.
Return on Assets (ROA) increased to 4.4% from 3.4%, while Return on Equity (ROE) rose to 20.5% from 14.2%, showcasing stronger earnings performance.
4. Capital Adequacy
Core capital adequacy ratio: 17.7% (down slightly from 17.9% in 2022 but above the 10% minimum regulatory requirement).
Total capital adequacy ratio: 18.4%, meeting the 12% regulatory threshold. These metrics indicate strong shock-absorbing capacity.
5. Asset Quality
The Non-Performing Loan (NPL) ratio improved to 4.4% from 5.8%, staying within the desired benchmark of less than 5%. This reflects improved credit risk management and effective regulatory measures.
6. Liquidity
Liquid assets to demand liabilities ratio: 28.8%, well above the regulatory minimum of 20%.
Gross loans to total deposits ratio rose to 92.5%, indicating effective deposit utilization for loan issuance.
7. Outreach and Inclusion
The number of bank branches increased to 1,011 (from 987), and banking agents grew by 41.1% to 106,176.
Agent banking facilitated deposits worth TZS 74,914.4 billion, reflecting a 21% growth, underscoring enhanced accessibility and inclusion.
Key Takeaways:
The banking sector's strong asset growth, improved profitability, better asset quality, and enhanced financial inclusion initiatives underscore its pivotal role in Tanzania's economic development. Its resilience and compliance with regulatory requirements demonstrate preparedness to sustain internal and external economic pressures.
The performance of Tanzania's banking sector in 2023 with important insights about its growth, stability, and evolving role in the economy:
1. Growth and Resilience
The sector has shown significant growth, with total assets rising by 17.8% to TZS 54,396 billion, reflecting robust expansion in banking activities.
Profitability surged, with pre-tax profits growing by 63.5%, showcasing improved operational efficiency and revenue growth.
The ability to absorb shocks is evident in strong capital adequacy ratios (17.7% core capital and 18.4% total capital), both well above regulatory requirements.
2. Improved Credit and Risk Management
The reduction in the Non-Performing Loan (NPL) ratio to 4.4% (from 5.8%) highlights better loan repayment and enhanced credit risk management practices.
Growth in earning assets (20.3%) indicates banks' continued focus on deploying resources in productive economic sectors.
3. Enhanced Financial Inclusion
Banking access expanded significantly, with 41.1% growth in banking agents (now at 106,176) and a rise in branches to 1,011.
Deposit transactions through agent banking increased by 21%, totaling TZS 74,914.4 billion, which demonstrates broader outreach, particularly to underserved populations.
4. Confidence in the Banking System
The 16.9% growth in deposits to TZS 38,076.5 billion, driven by local currency deposits, indicates increasing public trust and effective deposit mobilization strategies by banks.
Liquidity levels remained robust, with the liquid assets-to-demand liabilities ratio at 28.8%, well above the regulatory minimum of 20%, ensuring banks can meet obligations.
5. Challenges and Opportunities
Although capital adequacy ratios slightly declined, they remain comfortably above regulatory thresholds, suggesting room for further loan growth and asset expansion.
The high loan-to-deposit ratio (92.5%) reflects strong credit expansion but may warrant careful monitoring to avoid over-leveraging.
What It Tells Overall:
The 2023 performance highlights that Tanzania's banking sector is a critical driver of economic growth and stability. It is effectively balancing profitability with financial inclusion and risk management. The sector's resilience amid global and domestic challenges demonstrates its readiness to support Tanzania's economic goals while adapting to evolving market needs.
The National Bureau of Statistics report on Tanzania's Industrial Production Index (IIP) for Q2 2024 reveals a promising increase of 6% in overall industrial production from Q1 to Q2, moving the index from 98.9 to 104.9. This growth is largely driven by a 7.6% rise in the manufacturing sector, with notable production surges in tobacco products (up 56.9%), rubber and plastics (up 27.8%), and pharmaceuticals (up 10.2%). Compared to Q2 2023, the IIP shows a modest year-over-year increase of 0.4%, indicating long-term stability with mixed results across sectors. While water supply and waste management saw a 4.8% increase, declines in mining (-2.1%) and electricity supply (-2.5%) highlight areas that may need strategic support to sustain Tanzania’s industrial growth.
Overall Industrial Production Index:
The overall IIP rose from 98.9 in Q1 2024 to 104.9 in Q2 2024, a 6% increase.
Compared to Q2 2023 (104.5), there was a modest year-over-year increase of 0.4%.
Sectoral Performance:
Manufacturing: Increased by 7.6% from Q1 to Q2 2024. Within this sector, notable increases included:
Tobacco products: 56.9% increase
Rubber and plastics: 27.8% increase
Pharmaceuticals: 10.2% increase
Motor vehicles: 9.4% increase
Mining and Quarrying: Increased by 5.0% from Q1 to Q2 2024.
Electricity, Gas, Steam, and Air Conditioning: Increased by 1.4%.
Water Supply and Waste Management: Increased by 1.6%.
Declines in Specific Manufacturing Areas:
Manufacture of electrical equipment dropped by 15.0%.
Printing and reproduction of media decreased by 8.2%.
Manufacture of wood products decreased by 7.8%.
Long-term Trends (Comparing Q2 2023 to Q2 2024):
Water supply and waste management showed a 4.8% increase.
Manufacturing showed a 2.1% increase.
In contrast, electricity, gas, and steam supply decreased by 2.5%, and mining and quarrying declined by 2.1%.
Tanzania's Index of Industrial Production (IIP) for Q2 2024 provides a valuable snapshot of the country’s industrial performance, highlighting areas of growth and decline.
Overall Industrial Growth:
The 6% increase from Q1 to Q2 2024 signals positive growth and resilience in Tanzania's industrial sector, suggesting that industrial activities are rebounding or accelerating post-pandemic and amidst global challenges.
However, the modest year-over-year growth of 0.4% from Q2 2023 indicates that while there’s short-term improvement, longer-term growth has been slower, which could reflect challenges or fluctuations in industrial output over the past year.
Manufacturing as a Key Growth Driver:
Manufacturing recorded the highest growth (7.6% from Q1 to Q2 2024), pointing to this sector as a leading driver of industrial expansion. Significant increases in specific manufacturing areas (e.g., tobacco, rubber, and pharmaceuticals) may reflect both increased domestic demand and potential export opportunities.
High growth in pharmaceuticals and plastics could also indicate shifts in production focus, possibly due to changes in health sector demands and consumer goods preferences.
Mixed Performance Across Sub-sectors:
Some areas, like water supply and waste management, showed steady growth, while mining and electricity saw minor increases. These improvements reflect stability in essential service sectors, which are less volatile and respond to consistent demand.
However, declines in areas like electrical equipment and printing signal potential issues, such as reduced demand or production challenges in those areas, possibly influenced by shifts in technology or reduced investment.
Long-term Stability with Caution:
The comparison of Q2 2024 to Q2 2023 shows that while some manufacturing activities are growing, sectors like electricity, mining, and certain manufacturing sub-sectors (e.g., electrical equipment) are experiencing declines. This suggests potential structural challenges, like limited investment in infrastructure or energy, which might need policy attention for sustainable growth.
Hence, this research reveals a robust industrial recovery in the short term, driven by manufacturing, but also shows areas of concern in specific sub-sectors. It signals that targeted policies could help stabilize and grow underperforming areas, ensuring a more balanced industrial expansion for Tanzania.
Over the past 24 years, Tanzania has dramatically increased its investment in development projects, with loan amounts rising by an impressive 8,800% from TZS 12.5 billion in 2000 to a peak of TZS 1.48 trillion in 2023. This growth reflects Tanzania's evolving economic ambitions, shifting from smaller projects in the early 2000s to major infrastructure initiatives in recent years. With an average annual growth rate of 34.8% in the early period and a steady increase to an average loan size of TZS 1.11 trillion from 2021-2024, Tanzania has committed to long-term, large-scale projects that drive national development and economic transformation.
1. Early Period (2000-2005)
Initial Loan Amounts: Began at around TZS 12.5 billion in 2000.
Growth: Reached TZS 33.3 billion by 2005, showing a moderate increase.
Annual Growth Rate: Average of 34.8%—steady, moderate growth in loan amounts.
Project Focus: Smaller-scale development projects with relatively stable loan values.
Summary: This period marked a gradual increase in development loans, setting a foundation for future expansion, with an emphasis on smaller, manageable projects to build capacity.
2. Growth Phase (2006-2010)
Increase in Loan Amounts: Significant rise in total loan amounts, indicating a shift in development priorities.
Peak Loan in 2009: TZS 214.1 billion—a substantial increase from previous years.
Volatility: High year-over-year changes, suggesting fluctuations in project needs or funding availability.
Average Loan Size: TZS 85.4 billion.
Shift in Focus: More large-scale development projects were introduced, requiring higher financing.
Summary: This phase saw major increases in loan volumes and greater volatility, marking a shift towards larger, impactful development projects.
3. Expansion Period (2011-2015)
Consistent Loan Patterns: Loans became more stable in value, indicating stronger planning and commitment to regular project funding.
Average Loan Amount: TZS 220 billion.
2015 Peak: Loan amounts reached TZS 358.2 billion by the end of the period.
Trend: A steady upward trend with reduced volatility compared to the previous period.
Project Focus: Greater emphasis on infrastructure development as the primary driver.
Summary: The expansion period focused on more stable, predictable loan patterns, with infrastructure development projects becoming increasingly central.
4. High Growth Phase (2016-2020)
Substantial Loan Growth: Significant increases in loan amounts, reflecting an ambitious agenda for national development.
Loan Peak: Exceeded TZS 800 billion, highlighting large funding requirements for major projects.
Annual Growth: 33.1% average growth, with reduced volatility year-over-year.
Project Scale: Shift towards large-scale, transformative development projects.
Summary: This period shows Tanzania's strategic focus on robust, large-scale projects with consistent, stable loan increments, reflecting economic and infrastructure development goals.
5. Recent Period (2021-2024)
Highest Loan Levels: Loan amounts exceeded TZS 1 trillion consistently in this period, showing Tanzania’s capacity to handle larger debt.
2023 Peak: Reached a record high of TZS 1.48 trillion.
Average Loan Size: Around TZS 1.11 trillion.
Project Focus: Major infrastructure and national development projects, underscoring Tanzania’s commitment to transformational growth.
Summary: This phase highlights the government’s ambitious project scale and increased borrowing capacity, aimed at achieving long-term national development objectives.
Key Statistics and Observations (2000-2024)
Highest Single Loan Amount: TZS 1,477,605 million in 2023.
Highest Annual Growth Rate: 360.4% in 2012, indicating rapid expansion in that specific year.
Overall Growth: Loan amounts increased by 8,800% from 2000 to 2024.
Recent Average (2020-2024): TZS 1,107,477 million—demonstrating a substantial increase compared to earlier periods.
Most Stable Period: 2016-2020, due to lower year-to-year volatility, reflecting a stable and consistent investment strategy.
Notable Trends
Exponential Growth: Steady increase over 24 years, showing an upward trend in loan amounts aligned with Tanzania’s development priorities.
Shift to Larger Projects: Moving from small to large-scale projects, indicating growing confidence and investment in substantial infrastructure development.
Infrastructure Emphasis: Particularly in recent years, with a focus on sustainable, impactful infrastructure projects.
Continued Commitment: Even with fluctuations, the trend has shown an ongoing commitment to large-scale initiatives aimed at enhancing national development.
The loan trends from 2000 to 2024 showcase Tanzania’s progressive approach to development financing, evolving from smaller projects to larger, transformative initiatives. The recent years underline the government’s commitment to funding major infrastructure projects as a key strategy for national growth, illustrating the country’s increased borrowing capacity and dedication to sustainable development.
The trends in Tanzania's development project loans from 2000 to 2024 with key insights about the country’s economic priorities, capacity, and strategic development approach:
Evolving Economic Ambitions:
Tanzania’s loan growth from modest amounts to massive investments highlights an evolution in economic ambitions. The early years focused on smaller, foundational projects that built the capacity for Tanzania to eventually manage larger, more complex projects.
Increased Borrowing Capacity and Economic Maturity:
The consistent increase in loan amounts, especially in recent years with annual loans exceeding TZS 1 trillion, suggests that Tanzania has gained financial credibility and capacity to manage significant debt responsibly. This is typically a marker of economic maturation, as the government attracts and secures large-scale funding from development partners and lenders.
Infrastructure as a Development Backbone:
The data points to a clear prioritization of infrastructure, particularly in the last two phases. Infrastructure is foundational to economic growth as it enhances connectivity, productivity, and business opportunities. This investment suggests a focus on long-term national growth through improved transport, energy, and communications infrastructure.
Growing Stability in Economic Planning:
In the later phases, especially 2016-2020, there is a marked reduction in volatility year-over-year, indicating more consistent and predictable economic planning. This stability shows a maturing approach to budgetary management and project financing, likely a result of improved financial governance and strategic economic planning.
Shifting from Modest to Transformative Projects:
Over the 24-year period, Tanzania has shifted from financing smaller projects to ambitious, transformative initiatives. This trend reflects a confidence in taking on complex, high-impact projects that can drive significant national change, such as large-scale infrastructure that could transform sectors like agriculture, transportation, and industry.
Commitment to Sustainable Development Goals:
The emphasis on development financing aligns with Tanzania’s commitment to sustainable development, likely linked to broader goals such as poverty reduction, job creation, and industrialization. This trend supports Tanzania’s Vision 2025 and its aspirations to transition into a middle-income economy.
Resilience in Economic Policy:
Despite economic fluctuations and potential external challenges, the overall upward trend in development financing suggests a resilient policy approach. Tanzania’s ability to maintain consistent loan growth indicates a sustained commitment to growth, even through global or local economic challenges.
These loan trends reflect Tanzania’s strategic evolution towards building an economy grounded in robust infrastructure and national development. The willingness to secure increasing loans for development projects signals a vision for economic transformation, aimed at positioning Tanzania as a resilient, forward-looking economy.
Personal remittances from Tanzanians abroad play a vital role in supporting Tanzania's secondary income, with average quarterly transfers rising from around $90 million in 2013-2016 to approximately $138-$182 million in recent years. These inflows offer economic stability by providing a reliable income source that buffers families and communities against economic fluctuations. Additionally, remittances help sustain foreign exchange reserves, contributing to currency stability and offsetting trade deficits. The steady increase in remittances reflects strong diaspora ties, presenting opportunities for policy focus on optimizing remittance channels for national development.
Figures and Averages
Quarterly remittances from individuals abroad fluctuate, with some notable examples being $90 million to $95 million per quarter on average across certain years. For instance:
2013 to 2016: The average remittances per quarter hovered around $89 million to $96 million.
2017 to 2020: Slight increases saw quarterly remittances averaging $91 million to $94 million.
2021 to 2023: A gradual rise was observed, with quarterly values climbing closer to $138 million to $182 million.
Percentage Trends
Growth trend: The remittances have shown a gradual increase over the years, with a growth trend of around 3-5% per annum in the recent periods, likely due to an increased number of Tanzanians abroad and enhanced mechanisms for transferring funds back home.
Observations
Stable inflow: Despite fluctuations in global economic conditions, personal remittances remained a stable source of secondary income for Tanzania.
Significant share in Secondary Income: Remittances consistently constitute a substantial portion of the secondary income in Tanzania’s current account, highlighting the importance of expatriate earnings in supporting the domestic economy.
The data on personal transfers from individuals abroad offers several insights into Tanzania’s economic dynamics:
Economic Stability through Remittances: The steady flow of remittances provides a reliable source of income, bolstering Tanzania’s balance of payments. Even in fluctuating economic conditions, remittances appear resilient, offering a buffer that can help maintain household consumption, support families, and contribute to poverty reduction.
Role in Foreign Exchange: Remittances contribute to Tanzania’s foreign exchange reserves. As a stable inflow of foreign currency, they help ease pressure on the Tanzanian shilling, potentially contributing to exchange rate stability.
Support for Secondary Income: The substantial portion of secondary income attributed to remittances underscores their importance in balancing the current account. This inflow can offset trade deficits by compensating for outflows, such as imports or debt payments, through non-trade sources.
Reflects Diaspora Engagement: The consistent rise in remittances suggests a strong connection between the Tanzanian diaspora and their families or communities back home. This connection could be further harnessed for economic development initiatives, such as investment in small businesses, real estate, or infrastructure.
Potential for Policy Focus: Given the increasing trend, the government could develop policies that facilitate and maximize the impact of remittances, like reducing transfer fees, promoting financial literacy for recipients, or creating diaspora bonds to channel funds into development projects.
Overall, these remittances signify a positive, stabilizing force within Tanzania’s economy, providing a foundation for economic resilience and an opportunity for growth and policy innovation.
