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.
This research provides an in-depth look at the trends in foreign direct investment (FDI) inflows into Tanzania, revealing both stability and fluctuations over recent years. Quarterly FDI ranged from $216 million to $521.8 million, with an annual average between $1.4 billion and $2 billion. The data reflects Tanzania's appeal as an investment destination in key sectors like mining and infrastructure, driven by favorable policies and economic resilience. These figures underscore the importance of policy stability in sustaining investor confidence and maximizing FDI's positive impact on economic growth.
Key Figures and Averages
Quarterly Inflows: FDI inflows in Tanzania ranged from $216 million to $521.8 million per quarter. Specifically:
2017-2019: Average quarterly inflows were between $354 million and $390 million.
2020-2023: There was variability, with figures dropping closer to $216 million in some quarters but peaking around $521.8 million during other periods.
Annual Average: On an annual basis, the figures suggest that FDI averaged around $1.4 billion to $2 billion, though fluctuations occurred due to external economic factors and internal investment policies.
Observed Trends and Breakdown
Growth Patterns: In earlier years (2017-2019), FDI saw a steady average, indicating stable investor confidence. Post-2020, fluctuations were more pronounced, potentially reflecting global economic impacts and domestic adjustments.
Sector Focus: Although specific sectoral breakdowns are not detailed, Tanzania’s FDI patterns often align with investments in mining, infrastructure, and energy, driven by the country's natural resources and growing demand for infrastructure projects.
Volatility in Recent Quarters: The quarterly variability, particularly post-2020, may point to global economic disruptions or shifts in government policies affecting investment flow, as evidenced by dips and subsequent recoveries in FDI figures.
Insights
Investment Resilience: Despite some fluctuations, Tanzania maintained significant FDI inflows, underlining its appeal in key sectors.
Policy Implications: Continued growth in FDI, especially in sectors such as infrastructure and natural resources, reflects favorable policy environments. Strengthening policies could further stabilize and grow FDI.
Investor Confidence: The trends suggest a generally positive outlook, with investor confidence likely driven by Tanzania’s economic reforms and strategic regional position.
Overall, these FDI figures underscore Tanzania's potential as an attractive investment destination, though maintaining and increasing FDI may require attention to both policy stability and global economic conditions.
The data on foreign direct investments (FDI) into Tanzania highlights several key aspects of the country's economic landscape:
Attractiveness as an Investment Destination: The steady inflow of FDI, even with some fluctuations, indicates that Tanzania remains an appealing destination for international investors. This is likely due to its natural resources, strategic location, and the potential for growth in sectors such as mining, energy, and infrastructure.
Economic Resilience and Growth Potential: The resilience of FDI inflows, especially amid global economic challenges, speaks to Tanzania’s underlying economic strengths. This flow of capital can support economic diversification, infrastructure development, and job creation, driving long-term growth.
Impact of Policy and Stability: The stability of FDI inflows often reflects investor confidence in Tanzania’s regulatory environment and economic policies. Periods of high FDI inflows may coincide with favorable policies, while declines can indicate investor caution. Consistent FDI growth suggests effective policy frameworks, while fluctuations highlight areas for policy reinforcement to sustain investor confidence.
Sectoral and Regional Benefits: Significant FDI inflows suggest that sectors such as energy, construction, and mining attract substantial investment. This brings benefits to these industries and regions, stimulating regional development, technology transfer, and skill-building, which can positively impact the broader economy.
Foreign Exchange and Financial Stability: FDI also bolsters Tanzania’s foreign exchange reserves, helping to stabilize the currency and reducing reliance on foreign debt. This can improve Tanzania’s balance of payments and contribute to greater financial stability.
Opportunity for Policy Enhancement: The data implies that policy measures aimed at improving the investment climate—such as streamlined regulations, tax incentives, and improved infrastructure—could help attract even more FDI. Such policies could ensure Tanzania remains competitive and encourage sustainable, long-term investments.
In sum, the trends in FDI inflows reflect Tanzania's position as a significant investment destination, capable of attracting capital that can drive development and economic growth while highlighting opportunities for enhancing investment conditions.
Business Environment and Economic Growth
Tanzania’s tax reforms and policy adjustments have significantly shaped the business landscape and economic trajectory. These reforms have enhanced revenue collection while identifying policy areas that, with adjustments, could spur further growth and broaden Tanzania’s investment opportunities.
1. Current Taxation Landscape in Tanzania
In 2023/2024, Tanzania’s tax revenue reached approximately TZS 27.64 trillion, showing a robust 14.47% growth from the previous year. Major revenue contributions came from services (28.2%), trade (23.6%), and manufacturing (17.7%). Although recent reforms have increased collection efficiency, compliance costs remain a challenge, averaging 2% of annual revenue for businesses, particularly small and medium enterprises (SMEs). This burden can hinder growth and disincentivize formalization within the economy, impacting the government's ability to capture potential tax revenues.
2. Policy and Regulatory Challenges
Tanzania’s regulatory and tax framework presents complexities that are particularly challenging for SMEs. Despite recent improvements, the World Bank’s Ease of Doing Business Index (2024) scores Tanzania at 59, indicating moderate entry barriers. While comprehensive, the regulatory environment's high compliance costs and complexity rank Tanzania at 162 out of 190 for tax compliance ease. These burdens limit profitability for many businesses, especially SMEs, reducing available resources for reinvestment.
3. Foreign Direct Investment and Sectoral Growth Potential
In 2023/2024, Foreign Direct Investment (FDI) inflows reached approximately USD 1.5 billion, with strong interest in sectors such as energy, mining, and agriculture. With targeted policy reforms, FDI could increase at an annual rate of 10%, reaching an estimated USD 2.8 billion by 2030. Additionally, sectoral growth projections, such as an annual increase of 6-8% in agriculture and 7% in manufacturing, indicate a promising outlook if policies continue to incentivize investment and tax compliance.
4. Role of Key Stakeholders in Driving Tax Compliance and Economic Growth
The Tanzania Revenue Authority (TRA) is essential in enforcing tax compliance through initiatives like taxpayer education and digital tax solutions, such as Electronic Fiscal Devices (EFDs), which ensure real-time tracking and transparency. Local Government Authorities (LGAs) also play a role, especially in formalizing the informal sector through local levies. Industry organizations, including the Tanzania Private Sector Foundation (TPSF) and Confederation of Tanzanian Industries (CTI), advocate for policies that streamline tax compliance and reduce SME burdens to foster sectoral growth and economic resilience.
5. Key Figures: Projections for 2030
If current reforms continue, Tanzania's total tax revenue could increase from TZS 27.64 trillion in 2023/2024 to TZS 40 trillion by 2030. A reduction in compliance costs to 1.5% of revenue could free up resources for business expansion. Additionally, with a projected Ease of Doing Business Score increase to 70 by 2030, Tanzania’s economic environment is expected to be more attractive for investment, supporting sustained growth across key sectors.
Economic Indicator
Current (2023/2024)
Projected (2030)
Growth Rate
Total Tax Revenue (TZS trillion)
27.64
40
8%
FDI Inflows (USD billion)
1.5
2.8
10%
Compliance Cost (% of revenue)
2
1.5
Decrease
Ease of Doing Business Score
59
70
Increase
Conclusion
Through targeted tax reforms, Tanzania can strengthen its tax revenue base, reduce compliance costs, and enhance its attractiveness as an investment destination. This will drive sustainable economic growth, create jobs, and improve Tanzania’s competitiveness within the East African region. For these reforms to succeed, collaboration among government agencies, private sector organizations, and civil society is crucial to establishing an inclusive economic environment that benefits all Tanzanians.
Tanzania's economic outlook for 2024 shows strong growth potential, with a projected GDP increase of 5.4%, significantly higher than the 3% average for Sub-Saharan Africa (SSA). As part of the East African Community (EAC), which is forecasted to grow by 4.7% in 2024, Tanzania benefits from macroeconomic stability and strategic investments in infrastructure, particularly in energy, telecommunications, and transport. These investments, combined with stable inflation, are expected to boost private consumption and investment. However, Tanzania's public debt is projected to rise from 42.5% to 48.4% of GDP, reflecting infrastructure spending, while the fiscal deficit is expected to stabilize at 3.3% of GDP. Risks remain, especially around rising debt and climate-related challenges like droughts and floods, which could impact agriculture and economic stability. Despite these risks, Tanzania's growth prospects remain robust in comparison to other SSA countries.
1. Growth Outlook
Tanzania is expected to experience GDP growth of 5.4% in 2024, outperforming the regional average growth of 3% for SSA.
The East African Community (EAC), which includes Tanzania, is one of the strongest economic performers in SSA, with expected growth of 4.7% in 2024 and 5.7% by 2025–26.
2. Growth Environment
Tanzania benefits from macroeconomic stability and rising investments in sectors like energy, telecommunications, and transport, which help enhance productivity. The country’s inflation rate is expected to stabilize, supporting private consumption and investment.
Private consumption is expected to increase as inflation eases across SSA, with countries like Tanzania reaping benefits from stable inflation and favorable monetary policies, further bolstering growth.
3. Macroeconomic Performance
Government debt in Tanzania is estimated to rise slightly from 42.5% of GDP in 2023 to 48.4% of GDP in 2024, reflecting investments in key infrastructure projects.
In terms of sectoral performance, Tanzania’s growth is bolstered by services and infrastructure projects in energy and transport. Investment in these areas is critical for sustaining long-term growth.
Fiscal Balance: Tanzania's fiscal deficit is expected to improve slightly, with a fiscal deficit of around 3.3% of GDP in 2024.
4. Risk Outlook
High Debt: Public debt remains a key risk in Tanzania, as in many other SSA countries. The rising debt levels could strain fiscal resources, especially in a region where debt service obligations are already significant.
Climate Change and Conflict: Tanzania is exposed to climate risks and ongoing economic volatility in the region, which could affect agriculture and food security. Extreme weather events such as droughts or floods are persistent risks across the region.
Tanzania's economic position relative to other Sub-Saharan African (SSA) countries
Tanzania's economy is performing well relative to other Sub-Saharan African countries, with solid growth prospects and important investments. However, the country must address challenges related to debt and climate change to ensure that growth is sustainable.
Tanzania’s Strong Growth Outlook: With a projected GDP growth of 5.4% in 2024, Tanzania is set to grow much faster than the Sub-Saharan African average of 3%. This positions Tanzania as one of the leading economies in the region, especially within the East African Community (EAC) where growth is also expected to be robust.
Growth Environment: Tanzania benefits from macroeconomic stability and is making significant investments in energy, transport, and telecommunications. These investments are crucial for reducing productivity bottlenecks and fostering economic expansion. Stable inflation will also boost private consumption and investment, further enhancing growth.
Macroeconomic Performance: Tanzania's debt level is rising but remains relatively manageable. The government is using this debt to finance critical infrastructure, which is essential for long-term economic development. The country’s fiscal deficit is also improving, suggesting prudent fiscal management.
Risk Outlook: Despite its positive growth outlook, Tanzania faces risks related to its rising debt levels, which could become a burden if not managed properly. Additionally, climate-related risks such as droughts and floods, which are common in SSA, pose threats to Tanzania’s agricultural sector and overall economic stability.
Source: Africa’s Pulse October 2024 report
Global growth is projected to stabilize at 2.6% in 2024, with only a slight rise to 2.7% by 2026, falling below the pre-pandemic average of 3.1%. Advanced economies are expected to grow by 1.5% in 2024, while Emerging Markets and Developing Economies (EMDEs) will see 4.0% growth, driven by regions like South Asia, with India leading at 6.6%. Low-income countries are forecasted to grow by 5.0% in 2024. Key risks include geopolitical tensions, high interest rates, and debt stress, particularly for EMDEs, which may hinder recovery.
1. Global Growth Overview
Global GDP Growth is expected to stabilize at 2.6% in 2024 before increasing slightly to 2.7% in 2025-2026. This is significantly below the pre-pandemic average growth rate of 3.1% from 2010-2019.
By 2026, 80% of the world’s population will be living in countries where growth is slower than before COVID-19.
2. Advanced Economies
Growth in advanced economies is projected to be subdued, with an average growth of 1.5% in 2024 and increasing slightly to 1.7% in 2025. These figures are below the historical average of 2.0% for advanced economies.
United States: Expected to grow by 2.5% in 2024, driven by resilient domestic demand and investment.
Euro Area: Forecast to grow by only 0.7% in 2024, reflecting challenges from high inflation and energy prices.
Japan: Growth is projected at 0.7% in 2024, slightly lower due to weak demand.
3. Emerging Markets and Developing Economies (EMDEs)
Growth in EMDEs is forecast to slow slightly to 4.0% in 2024 and remain steady at 4.0% in 2025-2026, below the 4.5% average of the previous decade.
East Asia and Pacific: Growth is forecast at 4.8% in 2024, with China slowing to 4.8% due to weaker property sector demand.
South Asia: Led by India, this region is expected to grow at 6.2% in 2024, with India alone forecast to expand at 6.6%, making it one of the fastest-growing regions.
Sub-Saharan Africa: Projected to grow at 3.5% in 2024, and expected to rise to 4.0% by 2026.
4. Growth in Low-Income Countries (LICs)
Low-income countries are projected to grow at 5.0% in 2024, up from 3.8% in 2023, as they recover from commodity price shocks.
However, many low-income countries will remain poorer than pre-pandemic levels, and per capita income growth is expected to be just 3.0%.
5. Global Growth Risks
Geopolitical tensions, elevated global interest rates, and persistent inflation remain significant risks to global growth.
About 40% of EMDEs are highly vulnerable to debt-related stress, which could hamper growth if global financial conditions tighten.
Key Takeaways:
Global growth remains below historical norms, with 2.6% expected in 2024, and 80% of the world’s economies will grow slower than before COVID-19.
The U.S. and India are bright spots in the global economy, while growth in China and Eurozone is slowing.
Source: Global Economic Prospects June 2024 report
Tanzania's economy is projected to grow at a solid rate of 5-6% in 2024, outpacing Sub-Saharan Africa’s average growth of 3.5%. Key drivers of this growth include agriculture (28% of GDP), mining, and a recovering tourism sector. While global inflation, energy prices (with oil at $84 per barrel), and fiscal pressures pose risks, Tanzania’s inflation is expected to remain moderate compared to regional peers. Public debt remains sustainable, supported by large infrastructure projects like the Standard Gauge Railway. However, climate risks and global trade disruptions could impact future growth if not managed carefully.
1. Regional Context: Sub-Saharan Africa (SSA)
Sub-Saharan Africa’s growth is projected to reach 3.5% in 2024, slightly up from 3.0% in 2023. The region is expected to experience continued growth, hitting 4.0% by 2026.
Tanzania, as part of this region, shares similar growth dynamics, heavily influenced by commodity prices, fiscal policies, and global trends like inflation and interest rates.
2. Tanzania’s Growth Outlook
The World Bank forecast that Tanzania will maintain solid economic growth, particularly in sectors like agriculture, mining, and tourism.
Growth in Tanzania is typically higher than the regional average. It has been projected to grow at around 5-6% annually, reflecting its diversified economy. Key growth drivers include:
Agriculture: Contributing about 28% of GDP, agriculture remains a vital part of Tanzania’s economy. Global trends in agricultural prices, projected to stabilize, could benefit Tanzania’s export revenues.
Mining: Tanzania is a significant exporter of gold, and global gold prices are expected to remain stable or grow slightly, which will support the mining sector.
Tourism: After a sharp decline during the pandemic, Tanzania’s tourism industry is recovering, contributing to higher GDP growth projections.
3. Inflation and Fiscal Pressures in Tanzania
Like many countries in Sub-Saharan Africa, Tanzania is expected to face moderate inflation pressures, influenced by global commodity prices, especially in food and energy. The region's inflation is expected to be higher than the global average but will stabilize in 2024.
Tanzania’s inflation has been relatively moderate compared to some of its regional peers, thanks to government interventions and policies aimed at maintaining price stability. However, risks remain from:
Global energy prices: The report projects oil prices to average $84 per barrel in 2024, which could affect fuel import costs and inflation.
Food inflation: Tanzania’s agricultural sector could benefit from stable grain prices, helping to moderate food price inflation.
4. Public Debt and Investment
Tanzania’s public debt remains sustainable, but global financing conditions, including rising interest rates, pose risks. Tanzania, like other EMDEs, could face higher borrowing costs if global interest rates remain high, as expected (around 4% through 2026).
The report emphasizes the importance of public investment in driving growth in emerging markets, and Tanzania's focus on infrastructure projects, such as the Standard Gauge Railway (SGR) and energy projects, will be crucial for sustained growth.
5. Risks to Tanzania’s Economic Growth
Geopolitical risks and global trade disruptions could impact Tanzania’s export sectors, especially in minerals and agricultural products.
Climate-related risks are significant for Tanzania, where agriculture relies heavily on favorable weather conditions. Extreme weather events could disrupt food production, affecting both inflation and growth.
Debt distress risks in Sub-Saharan Africa remain elevated, with about 40% of EMDEs at risk. Although Tanzania is not currently in debt distress, careful fiscal management is essential to maintain sustainability.
6. Tanzania’s Policy Responses
To mitigate risks, Tanzania will need to focus on:
Strengthening public investment efficiency to ensure that infrastructure projects deliver high returns.
Diversifying its export base to reduce vulnerability to global commodity price swings.
Implementing fiscal policies that support growth while maintaining debt sustainability.
Key Figures for Tanzania (based on SSA and global trends):
Growth: Projected at 5-6% in 2024, higher than the SSA average of 3.5%(GEP-June-2024).
Inflation: Expected to remain moderate but subject to global food and energy price fluctuations.
Oil prices: $84 per barrel in 2024 could increase import costs for Tanzania, affecting inflation.
Public investment: Tanzania’s large infrastructure projects are key to sustaining growth but require efficient management and fiscal responsibility.
Summary:
Tanzania’s economy is expected to continue growing at a solid rate, outperforming the regional average. Growth drivers include agriculture, mining, and tourism.
Risks from global inflation, commodity prices, and debt sustainability are present, but with sound policies, Tanzania can navigate these challenges.
Source: Global Economic Prospects June 2024 report
Global growth is projected to stabilize at 2.6% in 2024, rising to 2.7% by 2025-2026, which is slower than the pre-COVID average of 3.1%. Emerging Market and Developing Economies (EMDEs) are forecasted to grow at 4.0% in 2024, with Sub-Saharan Africa growing at 3.5%. Global inflation is expected to moderate to 3.5%, though it will remain above pre-pandemic levels, especially in EMDEs. Oil prices are set to average $84 per barrel in 2024, while non-energy commodity prices remain stable. Risks to growth include geopolitical tensions and high debt distress in 40% of EMDEs.
Global Growth:
Global GDP growth is projected to stabilize at 2.6% in 2024, with an expected increase to 2.7% in 2025-2026. This growth is slower than the 3.1% average in the decade before COVID-19.
By 2026, 80% of the world’s population will experience slower growth compared to pre-pandemic levels.
Regional Growth:
Emerging Market and Developing Economies (EMDEs) are forecast to grow at 4.0% in 2024, down from 4.2% in 2023. China’s growth is expected to slow to 4.8% in 2024.
Sub-Saharan Africa is expected to grow at 3.5% in 2024, with a rise to 4.0% in 2026.
Global Inflation:
Inflation is projected to moderate to 3.5% globally in 2024, but it will remain higher than pre-pandemic levels.
Inflation in EMDEs is expected to decline but will remain challenging for many regions due to commodity price fluctuations.
Commodity Prices:
Oil prices are projected to be slightly higher in 2024, averaging $84 per barrel, but lower than 2023 prices.
Prices for non-energy commodities are expected to remain stable.
Risks to Global Growth:
Escalating geopolitical tensions and trade fragmentation pose significant risks to global growth.
Debt distress risks remain high for 40% of EMDEs, with many economies vulnerable to shocks.
Source: Global Economic Prospects June 2024 report
