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

1. 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.
2. 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

1. Investment Resilience: Despite some fluctuations, Tanzania maintained significant FDI inflows, underlining its appeal in key sectors.
2. 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.
3. 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:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

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.

1. 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.
2. 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.
3. 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.
4. 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.

1. 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.
2. 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​.
3. 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.
4. 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​.
5. 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

Addressed Infrastructure, Regulatory Efficiency, and Public Service Challenges

The Business Ready 2024 report provides an assessment of Tanzania's business environment based on three key pillars: Regulatory Framework, Public Services, and Operational Efficiency

1. Regulatory Framework: Tanzania scored 65.00 points, placing it in the third quintile, meaning its regulatory environment is moderately favorable. This includes regulations that govern business entry, labor, taxation, and financial services, though there is room for improvement in areas like market competition and insolvency.

What it Means: The Regulatory Framework pillar focuses on the laws, rules, and regulations that businesses must follow in Tanzania. A score of 65.00 indicates that while the regulatory environment is moderately favorable, it still has areas that need improvement.

• Strengths: Tanzania has made progress in areas like business entry, taxation, and labor regulations. These areas provide businesses with a stable set of rules for operation.
• Areas for Improvement: The score suggests that Tanzania could enhance regulations governing market competition and business insolvency, where businesses might face difficulties related to anticompetitive behavior or delays in resolving insolvency matters.

What is Measured: This pillar assesses the rules, laws, and regulations that businesses must follow as they enter, operate, and exit the market. It focuses on whether these regulations are clear, fair, and supportive of entrepreneurial activity.

Key Areas Measured:

• Business Entry: The ease with which businesses can register and start operating.
  • Indicator: Time, cost, and complexity involved in starting a business.
• Labor: The flexibility and protections offered by labor laws, including hiring, firing, and worker protections.
  • Indicator: Availability of paid leave, overtime regulations, and worker dismissal processes.
• Financial Services: Regulations governing financial transactions, credit access, and investment opportunities.
  • Indicator: Laws governing credit access, ease of securing loans, and the stability of financial services.
• International Trade: The regulatory environment that affects import/export activities and cross-border transactions.
  • Indicator: Time and costs involved in clearing customs, and regulations around cross-border electronic payments and contracts.
• Taxation: The rules governing business tax obligations.
  • Indicator: Clarity of tax laws, time to file, and availability of tax services.

What It Tells About Tanzania:

• Score: 65.00 points
  • Tanzania performs moderately well here, showing that the country has a decent legal framework to regulate business activities, but there is room for improvement in areas like market competition and business insolvency.
    • Example: While it’s fairly easy to start a business in Tanzania, there may still be inefficiencies in accessing financial services or dealing with labor regulations that slow down business growth.

2. Public Services: Tanzania's score for public services is 51.56 points, placing it in the fourth quintile. This reflects challenges in public service provision that support businesses, including utility services and government institutions related to business regulation.

What it Means: This pillar evaluates the quality of government-provided services that help businesses comply with regulations, such as utility services (electricity, water), online tax services, and other government support structures.

• Challenges: Tanzania’s low score in this area reflects inefficiencies or gaps in public services. For example, businesses may struggle with frequent power outages or delays in obtaining permits, which can slow down operations.
  • Examples: The time to obtain a construction permit could be long, and delays in utility services (like electricity) could further hinder business activities. In some economies, businesses face multiple power outages each month, and this might be contributing to Tanzania's lower score in public services.

What is Measured: This pillar looks at the quality of public services provided by the government that are necessary for businesses to function, including utility services, government transparency, and the infrastructure that supports business compliance with regulations.

Key Areas Measured:

• Utility Services: Access to essential services such as electricity, water, and internet.
  • Indicator: Frequency and duration of power outages, reliability of water services, and internet availability.
• Taxation: Availability and accessibility of online tax services for businesses.
  • Indicator: Whether businesses can file taxes electronically, access support via online tools, and comply with tax obligations efficiently.
• International Trade: Efficiency of customs and border management systems.
  • Indicator: Whether coordinated border management systems are in place and how easily businesses can trade across borders.
• Financial Services: Availability of credit registries and bureaus that collect business-related data.
  • Indicator: How well businesses can access credit and how transparently financial data is managed.

What It Tells About Tanzania:

• Score: 51.56 points
  • Tanzania faces challenges in the quality of its public services, particularly in providing reliable utility services and modernized government support.
    • Example: Frequent power outages or delays in obtaining construction permits could hinder businesses, while limited online tax services might add to compliance costs.
  • Utility Services: Businesses in Tanzania likely deal with infrastructure challenges, such as power reliability, which impacts operational efficiency.

3. Operational Efficiency: Tanzania performed better in operational efficiency with a score of 62.15 points, placing it in the third quintile. This category measures how efficiently businesses can comply with regulations and access public services.

What it Means: The Operational Efficiency pillar measures how easy it is for businesses to comply with regulations and access services. Tanzania’s score in this pillar suggests that businesses face some challenges but generally have moderate success in navigating the regulatory landscape and accessing the services they need.

• Strengths: Tanzania’s operational efficiency score is stronger than its public services score. This suggests that, while services may be lacking, businesses are still able to function reasonably well. Examples of operational challenges might include delays in filing and paying taxes or resolving commercial disputes, which could affect day-to-day business activities.
• Areas for Improvement: The time to settle a commercial dispute in Tanzania could be a challenge. In some economies, resolving disputes can take up to five years, while top-performing economies resolve them in a fraction of the time. Tanzania likely faces inefficiencies in this regard, impacting overall business operations.

What is Measured: This pillar evaluates how easy it is for businesses to comply with the regulatory framework and access public services. It measures the practical implementation of the rules and services described under the first two pillars.

Key Areas Measured:

• Business Entry: Time and effort required to navigate business registration processes.
  • Indicator: The time, number of procedures, and costs involved in registering a business.
• Dispute Resolution: Efficiency of the legal system in resolving commercial disputes.
  • Indicator: Time and cost to resolve business-related disputes in court.
• Labor: How easily businesses can comply with labor regulations, including wage reporting and health and safety compliance.
  • Indicator: Time to process payroll and ensure compliance with labor laws.
• Financial Services: Ease with which businesses can secure loans and financial products.
  • Indicator: Time to secure a loan or access other financial services.
• International Trade: Time and cost to comply with trade regulations, including import/export processes.
  • Indicator: Time and number of documents needed to import/export goods.

What It Tells About Tanzania:

• Score: 62.15 points
  • Tanzania’s operational efficiency score indicates that while businesses face some challenges, they are still able to operate within the regulatory framework.
  • Example: The time required to resolve commercial disputes may be longer than average, but businesses can generally navigate labor laws and financial services without excessive delays. The average number of power outages might also be an issue, but businesses find ways to work around these challenges.

Tanzania's scores in the Business Ready 2024 report provide valuable insights into the country's economic development by highlighting strengths and challenges in its business environment. Here's a breakdown of what these figures reveal about Tanzania's economic development:

1. Regulatory Framework (Score: 65.00)

• Moderately Supportive Regulations: With a score of 65.00, Tanzania has a moderately favorable regulatory environment for businesses. This indicates that the country has established a basic legal framework for business operations, but there are still obstacles that prevent optimal economic performance.
  • Impact on Economic Development: The regulatory framework is crucial for promoting investment and entrepreneurship. Tanzania’s score shows that businesses can operate under fairly stable regulations, but inefficiencies, especially in market competition and insolvency laws, could slow business expansion and investment.
  • Challenges: The legal infrastructure needs to improve to make the economy more competitive and resilient, particularly in handling market disputes and allowing businesses to recover from financial distress. A stronger regulatory environment could lead to increased investor confidence, which is key to fostering long-term economic growth.

2. Public Services (Score: 51.56)

• Weak Infrastructure and Public Services: Tanzania’s score of 51.56 in the Public Services pillar reflects significant challenges, particularly in the quality and reliability of government services and infrastructure like electricity, water, and internet.
  • Impact on Economic Development: Weak public services hinder business productivity. Frequent power outages, delays in obtaining construction permits, and limited access to digital public services all contribute to higher operational costs for businesses, which, in turn, reduces overall economic efficiency and growth.
  • Challenges: Tanzania’s economic development is constrained by the inefficiency of its public services, which affects business sustainability and the ease of doing business. Improving public service delivery, especially infrastructure and digital services, is essential for boosting productivity and attracting both domestic and foreign investment.
  • Potential for Growth: Investments in infrastructure, especially utilities, could unlock greater productivity in sectors like manufacturing and agriculture, leading to job creation and improved economic growth.

3. Operational Efficiency (Score: 62.15)

• Moderate Operational Effectiveness: A score of 62.15 suggests that while businesses in Tanzania can function within the regulatory framework, they face delays and inefficiencies, such as resolving commercial disputes and securing public services like permits.
  • Impact on Economic Development: Delays in resolving disputes and inefficiencies in business procedures directly affect the cost of doing business. While Tanzania has made some progress in enabling business operations, the remaining inefficiencies reduce business competitiveness and slow down economic expansion.
  • Challenges: The slow pace of dispute resolution and challenges in accessing public services mean businesses spend more time and resources complying with regulations, which could otherwise be used to expand their operations or innovate. For Tanzania's economy to grow faster, it needs to improve judicial efficiency, simplify regulatory processes, and make it easier for businesses to access financing and other services.
  • Potential for Growth: Enhanced operational efficiency would attract more businesses and investors, facilitating economic diversification and boosting sectors like trade, technology, and financial services.

Overall Economic Development Insights:

• Moderate Progress but Room for Improvement: Tanzania’s scores show that while there has been progress in developing a business-friendly environment, significant challenges remain. Improvements in public services and operational efficiency are crucial to creating an environment where businesses can thrive, which would in turn drive economic growth.
• Infrastructure and Service Delivery are Key Bottlenecks: Weaknesses in public services, particularly infrastructure like electricity and water, are limiting business productivity and deterring investment. Addressing these challenges would have a substantial positive impact on economic development, particularly in industrial and agricultural sectors, which rely heavily on reliable infrastructure.
• Regulatory and Judicial Reforms: The regulatory framework provides a foundation for economic growth, but further reforms are needed, particularly in market competition and insolvency laws. Accelerating dispute resolution and making regulations clearer and more predictable will foster a more dynamic and competitive private sector, driving economic expansion.

Strategic Recommendations for Economic Development:

1. Invest in Infrastructure: Improving utility services, especially reliable electricity and internet access, will lower operational costs and improve productivity across sectors, boosting overall economic growth.
2. Strengthen the Legal and Regulatory Environment: Enhancing regulations related to market competition, insolvency, and business disputes will create a more favorable environment for entrepreneurship and innovation, encouraging more domestic and foreign investment.
3. Improve Public Service Delivery: Streamlining processes such as tax filing, permit issuance, and customs procedures through digitalization would significantly reduce the cost of doing business and improve Tanzania’s global competitiveness.

As of the period ending on December 31, 2023, both NMB Bank and CRDB Bank have exhibited notable financial performance, reflecting various key metrics that are indicative of their operational strength and market presence.

NMB Bank reported total assets amounting to 12.2 trillion Tanzania Shillings, representing a remarkable 19% growth. This increase underscores the bank's ability to expand its asset base, possibly through effective investment strategies or successful acquisition initiatives. On the other hand, CRDB Bank demonstrated a total asset growth of 14%, reaching 13.2 trillion Tanzania Shillings. Although slightly lower than NMB Bank's growth rate, this still signifies a substantial increase in the bank's overall financial standing.

In terms of total deposits, NMB Bank recorded 8.4 trillion Tanzania Shillings, marking an 11% growth. This suggests a consistent influx of funds into the bank, likely driven by customer trust and effective deposit mobilization efforts. CRDB Bank, while also experiencing growth, posted a total deposit figure of 8.9 trillion Tanzania Shillings, reflecting an 8% increase. This showcases the bank's ability to attract and retain deposits, albeit at a slightly lower growth rate compared to NMB Bank.

Loan and advances, a critical aspect of banking operations, showed significant growth for both institutions. NMB Bank reported a loan and advances portfolio of 7.7 trillion Tanzania Shillings, reflecting a substantial 28% increase. This growth may indicate the bank's proactive approach in extending credit facilities to businesses and individuals. Similarly, CRDB Bank exhibited a robust performance in this area with a loan and advances portfolio of 8.5 trillion Tanzania Shillings, reflecting a commendable 23% growth.

Moving on to profitability, NMB Bank demonstrated strong financial results. The bank reported a profit before tax of 775 billion Tanzania Shillings, indicating a notable 26% increase. Additionally, the profit after tax for NMB Bank amounted to 542 billion Tanzania Shillings, reflecting a similar 26% growth. These figures underscore the bank's ability to generate profits efficiently, possibly through effective cost management and revenue generation strategies.

CRDB Bank, while also delivering positive financial results, exhibited a profit before tax of 599 billion Tanzania Shillings, showing a 20% increase. The profit after tax for CRDB Bank stood at 424 billion Tanzania Shillings, reflecting a 21% growth. These figures indicate the bank's capacity to maintain solid profitability, although at a slightly lower growth rate compared to NMB Bank.

Hence, both NMB Bank and CRDB Bank demonstrated commendable financial performance for the period ended December 31, 2023, with NMB Bank showcasing higher growth rates in key areas such as total assets, total deposits, loan and advances, as well as profitability. These financial indicators provide valuable insights into the operational efficiency and market competitiveness of the two banks during the specified period.

The health and competitiveness of these banks in the Tanzania financial sector:

The financial data reveals that both NMB Bank and CRDB Bank are robust financial institutions, with NMB Bank showcasing higher growth rates in key areas. Investors, regulators, and other stakeholders may use this information to assess the banks' financial health, operational strategies, and overall market competitiveness.

Asset Growth and Stability:

NMB Bank has shown a higher growth rate in total assets (19%) compared to CRDB Bank (14%). This suggests that NMB Bank has been successful in expanding its asset base, possibly through strategic investments or acquisitions, making it a key player in the market.

Deposit Mobilization:

Both banks experienced growth in total deposits, indicating the ability to attract and retain customer funds. NMB Bank's 11% growth in deposits may suggest effective deposit mobilization efforts, while CRDB Bank, with an 8% growth, also demonstrated strength in this area but at a slightly lower rate.

Lending Activities:

Both banks exhibited substantial growth in loan and advances portfolios, suggesting active participation in lending to businesses and individuals. NMB Bank's 28% growth and CRDB Bank's 23% growth in this category indicate a willingness to extend credit and support economic activities.

Profitability:

NMB Bank reported higher growth rates in both profit before tax (26%) and profit after tax (26%) compared to CRDB Bank, which reported a 20% growth in profit before tax and a 21% growth in profit after tax. This signifies that NMB Bank was more efficient in managing costs or generating revenues during the specified period.

Overall Competitiveness:

The data suggests that NMB Bank had a relatively stronger financial performance during this period, with higher growth rates in key metrics. However, CRDB Bank also demonstrated positive growth across various parameters, indicating its stability and competitiveness in the market.

Market Positioning:

NMB Bank's higher growth rates across multiple financial indicators might position it as a more dynamic and rapidly growing institution. CRDB Bank, while still showing positive growth, might be perceived as slightly more conservative or stable in its approach.

The forecasting performance in the coming year (2024) requires consideration of various factors, including economic conditions, regulatory changes, and the banks' strategic initiatives.

Growth Trajectory: