Analyzing Government Policies for a Thriving Digital Economy

TICGL’s Economic Research Centre has published a new study authored by Amran Bhuzohera, Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com), and Dr. Jasinta Msamula Kahyoza PhD, FMVA, CP3P (jmsamula@mzumbe.ac.tz), which investigates the intersection between Artificial Intelligence (AI), youth employment, and government policy frameworks within Tanzania’s evolving digital economy.

The study provides critical insights into how AI-driven transformation can be aligned with national employment strategies and policy reforms to harness the potential of Tanzania’s young workforce. With their combined expertise in economic modeling, innovation policy, and strategic development, the authors contribute to shaping a forward-looking dialogue on technology, inclusion, and sustainable economic growth.

Tanzania’s youth population—over 60% under the age of 25—represents both a demographic dividend and a pressing employment challenge. While official youth unemployment stood at 3.35% in 2024, underemployment and informality remain widespread. The research highlights that the rise of AI, if managed inclusively, could transform this landscape by creating millions of digital jobs and expanding opportunities for self-employment, freelancing, and innovation-driven entrepreneurship.

Key Insights

• AI as a job creator, not just a disruptor: Globally, AI may replace 85 million jobs but create 97 million new ones by 2025, largely in data science, creative design, and tech services. Tanzania’s youth could benefit through AI-driven platforms, digital freelancing, and agritech innovations.
• Digital economy transformation: The Tanzania Digital Economy Strategic Framework (2024–2034) and Youth Development Policy (2024) are pivotal in promoting youth digital skills, while the AI Readiness Assessment Report (2025) recognizes AI’s potential in sectors like agriculture, healthcare, and education.
• Regional and global opportunities: Africa’s digital economy could create 230 million digital jobs by 2030, with Tanzania expected to generate 5 million digital employment opportunities through AI-enabled services and start-ups.
• Private sector collaboration: Programs like the Digital Opportunity Trust (DOT) and PPP-based innovation hubs demonstrate the private sector’s role in providing digital literacy and start-up incubation for youth employment.
• Policy gap: Only 45% of Tanzanian youth have internet access, highlighting a critical need for digital inclusion policies to ensure equitable participation in the AI economy.

Policy Recommendations

To maximize AI’s potential for inclusive growth, the paper proposes the following measures:

• AI Upskilling Program: Integrate AI and digital literacy into school and vocational curricula, targeting 1 million youth by 2028 through partnerships with global e-learning platforms.
• Incentives for AI Entrepreneurship: Offer tax breaks, innovation grants, and incubation funding for 500,000 youth-led AI start-ups in agritech, fintech, and creative industries.
• PPP-Driven Digital Infrastructure: Strengthen the Digital Tanzania project to deliver affordable connectivity and AI tools, especially in rural areas, enabling 2 million indirect digital jobs.
• Ethical and Inclusive AI Governance: Adopt guidelines from the AI Readiness Report (2025) to ensure transparent, bias-free AI development across sectors.

Conclusion

AI presents a transformative opportunity to redefine youth employment and self-employment in Tanzania’s digital economy. When supported by inclusive policies, public-private partnerships, and nationwide digital literacy, AI could shift the narrative from unemployment to innovation. By 2030, Tanzania stands to achieve a digital dividend through job creation, improved productivity, and sustainable youth empowerment — positioning the country as a regional leader in AI-driven development.

📘 Read the Full Discussion Paper:
“Youth Employment in the Age of AI: Analyzing Government Policies for a Thriving Digital Economy”
Authored by Amran Bhuzohera, Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P, and Dr. Jasinta Msamula Kahyoza PhD, FMVA, CP3P
Published by TICGL | Economic Research Centre
🌐 www.ticgl.com

Central Government Dominates Borrowing as USD Exposure Heightens Currency Risks

As of June 2025, Tanzania’s external debt stock stood at USD 32,955.5 million (approximately TZS 82.4 trillion, assuming an exchange rate of TZS 2,500/USD), reflecting a marginal increase of 0.1% from the previous month. This external debt comprises about 70.7% of the total national debt, highlighting the country's continued reliance on foreign financing. The central government remains the primary borrower, holding 85.4% of the external debt (USD 28.1 billion), followed by the private sector with 14.6% (USD 4.8 billion), while public corporations account for a negligible share. Most of the disbursed debt is allocated to priority sectors such as transport & telecommunications (25.4%), social welfare & education (21.3%), and energy & mining (16.4%). However, 67.6% of the debt is denominated in USD, exposing the country to significant exchange rate risks amid recent currency depreciation. Despite prudent debt servicing—interest arrears are relatively low—the narrow fiscal space underscores the need for careful management and stronger domestic revenue mobilization.

1. External Debt Stock by Borrower – June 2025

The external debt stock represents the total outstanding debt owed to foreign creditors, including principal and interest arrears. As of June 2025, Tanzania’s external debt stock stood at USD 32,955.5 million (approximately TZS 82.4 trillion, assuming an exchange rate of ~TZS 2,500/USD, consistent with recent BoT reports). This reflects a marginal monthly increase of 0.1% from May 2025 and accounts for approximately 70.7% of Tanzania’s total national debt (external and domestic combined).

Total External Debt

• Amount: USD 32,955.5 million
• Monthly Increase: +0.1% (approximately USD 32.9 million, assuming May 2025 debt was ~USD 32,922.6 million).
• Share of Total National Debt: ~70.7%, indicating a significant reliance on external financing compared to domestic debt (e.g., TZS 32,615.7 billion in September 2024, per TICGL).
• Context: The slight increase aligns with trends observed in earlier months, such as a 0.5% decline from December 2024 to January 2025 (USD 33,905.1 million to USD 33,137.7 million), followed by an increase to USD 35,039.8 million by February 2025, reflecting fluctuations due to new disbursements and debt servicing. The African Development Bank notes that Tanzania’s fiscal deficit, projected at 2.5% of GDP in FY 2024/25, is partly financed by external borrowing, supporting this trend.

Breakdown by Borrower

The following table summarizes the external debt stock by borrower category for June 2025:

• Central Government:
  • Amount: USD 28,133.7 million (85.4% of total external debt).
  • Disbursed Outstanding Debt (DOD): USD 28,055.0 million, indicating that nearly all central government debt is disbursed and actively financing projects.
  • Interest Arrears: USD 78.7 million, a minor portion (0.28% of central government debt), suggesting effective debt servicing for public debt.
  • Context: The central government’s dominance (85.4%) is consistent with historical trends, with shares of 76.8% in November 2024 and 78.1% in September 2024. This reflects the government’s role in funding major infrastructure projects (e.g., Standard Gauge Railway, Julius Nyerere Hydropower Project) and social services, as noted in the FY 2024/25 budget allocating TZS 14.08 trillion for development expenditure.
  • Implications: The high share underscores the public sector’s reliance on external financing for development goals, placing a significant repayment burden on public finances. The low interest arrears indicate prudent debt management, supported by multilateral concessional loans (54.5% of external debt in November 2024).
• Private Sector:
  • Amount: USD 4,820.6 million (14.6% of total external debt).
  • DOD: USD 4,630.7 million, with interest arrears of USD 189.9 million (3.9% of private sector debt).
  • Context: The private sector’s share has declined slightly from 23.6% in January 2025 (USD 8,004.7 million) and 21% in December 2019, reflecting reduced access to foreign credit, possibly due to tighter global lending conditions or currency risks. The World Bank notes that private sector borrowing constraints may hinder economic diversification.
  • Implications: The higher interest arrears (relative to the central government) suggest challenges in private sector debt servicing, potentially due to exchange rate fluctuations (67.6% USD-denominated debt) or weaker cash flows in sectors like agriculture and industry.
• Public Corporations:
  • Amount: USD 1.3 million (negligible share).
  • Context: Public corporations (e.g., TANESCO, Tanzania Ports Authority) have minimal external debt exposure, consistent with January 2025 (USD 3.8 million). This reduces government liability risks from state-owned enterprises.
  • Implications: The negligible share reflects a deliberate strategy to limit public corporation borrowing, aligning with fiscal reforms to improve state-owned enterprise performance, as evidenced by TZS 1.028 trillion in dividends collected in FY 2024/25.

Key Takeaway

• The central government’s 85.4% share of external debt highlights its role in driving debt-financed development, particularly in infrastructure and social services. The private sector’s reduced share and higher arrears indicate challenges in accessing and servicing foreign credit. The negligible debt of public corporations minimizes fiscal risks but limits their role in external financing.

2. Disbursed Outstanding Debt (DOD) by Use of Funds – % Share

The DOD represents the portion of external debt that has been disbursed and is actively funding projects or sectors. The allocation of DOD reflects Tanzania’s development priorities under Vision 2050 and the Third Five-Year Development Plan (FYDP III).

Breakdown by Use of Funds

The following table summarizes the percentage share of DOD by sector for June 2025:

• Transport & Telecommunication (25.4%):
  • Context: This sector receives the largest share, consistent with historical trends (21.4% in November 2024, 21.5% in September 2024). Key projects include the Standard Gauge Railway (SGR), port expansions, and ICT infrastructure, aligning with Tanzania’s goal to enhance connectivity and trade under FYDP III.
  • Implications: Investments in transport (e.g., SGR, Dar es Salaam port) and telecommunications (e.g., 5G networks) support economic growth by improving logistics and digital access. However, the high allocation may crowd out funding for other sectors like agriculture.
• Social Welfare & Education (21.3%):
  • Context: This sector’s significant share (20.4% in November 2024, 20.8% in September 2024) reflects investments in human capital, such as free education programs and healthcare infrastructure. The World Bank’s USD 227 million financing for climate and marine conservation in June 2025 also supports social welfare.
  • Implications: Funding education and social welfare enhances workforce development and poverty reduction, critical for long-term growth. However, recurrent costs (e.g., teacher salaries) may compete with capital investments.
• Energy & Mining (16.4%):
  • Context: Investments in energy (e.g., Julius Nyerere Hydropower Plant) and mining (e.g., gold, critical minerals) align with Tanzania’s energy access goals and export growth (gold exports up 24.5% in April 2025). The sector’s share is slightly higher than November 2024 (15%).
  • Implications: Energy investments address power shortages, supporting industrial growth, while mining boosts export revenues. However, environmental and governance risks in mining require careful management.
• Budget Support (15.2%):
  • Context: This share (19.9% in January 2025) reflects external loans used to finance recurrent expenditures, such as salaries and debt servicing. The African Development Bank notes that reliance on budget support poses fiscal risks if external financing decreases.
  • Implications: High budget support allocation indicates fiscal pressures, as seen in the TZS 270.2 billion deficit in May 2025. Reducing reliance on external budget support through domestic revenue mobilization (e.g., TZS 2,880.2 billion in May 2025) is critical.
• Agriculture (6.5%):
  • Context: The low share (5.1% in September 2024) is surprising given agriculture’s role in Tanzania’s economy (25% of GDP, 65% of employment). Investments support irrigation and agribusiness but are limited compared to infrastructure.
  • Implications: Underfunding agriculture may constrain rural development and food security, despite export growth in cashew nuts (141% in April 2025).
• Finance & Insurance (5.1%) and Industry (4.0%):
  • Context: These sectors receive minimal allocations (4.0% for industry in January 2025), reflecting limited focus on manufacturing and financial sector development. The World Bank highlights declining industrial productivity as a constraint on economic diversification.
  • Implications: Low funding may hinder Tanzania’s industrialization goals under Vision 2050, limiting job creation and export diversification.
• Others (6.1%):
  • Context: Includes water, balance of payments support, and miscellaneous projects. The World Bank’s USD 300 million financing for disaster preparedness in June 2025 may contribute to this category.
  • Implications: Diverse allocations support resilience but dilute focus on priority sectors.

Key Takeaway

• The focus on Transport & Telecommunication (25.4%) and Social Welfare & Education (21.3%) reflects Tanzania’s commitment to infrastructure-driven growth and human capital development. However, the low shares for agriculture (6.5%) and industry (4.0%) may limit inclusive growth, given their economic significance.

3. DOD by Currency Composition – % Share

The currency composition of DOD indicates the foreign currencies in which Tanzania’s external debt is denominated, exposing the country to exchange rate risks.

Breakdown by Currency

The following table summarizes the percentage share of DOD by currency for June 2025:

• US Dollar (USD) (67.6%):
  • Context: The USD’s dominance is consistent with historical trends (67.4% in September 2024, 68.1% in January 2025). This reflects borrowing from multilateral institutions (e.g., World Bank, IMF) and commercial creditors, often denominated in USD.
  • Implications: High USD exposure makes Tanzania vulnerable to exchange rate fluctuations. The Tanzanian Shilling depreciated by 8% in 2023, increasing debt servicing costs. A stronger USD in 2025 could further strain public finances, as noted by The Citizen.
• Euro (EUR) (17.2%):
  • Context: Euro-denominated debt (16.1% in January 2025) reflects loans from European institutions (e.g., European Investment Bank). The slight increase may indicate new Euro-based financing.
  • Implications: Diversification into Euros reduces USD reliance but exposes Tanzania to Eurozone economic conditions.
• Japanese Yen (JPY) (4.9%) and Chinese Yuan (CNY) (3.4%):
  • Context: JPY and CNY shares align with bilateral loans from Japan and China, supporting infrastructure projects like the SGR. The CNY share is lower than in January 2025 (6.3%), possibly due to reduced Chinese lending.
  • Implications: These currencies provide some diversification, but their small shares limit risk mitigation.
• Special Drawing Rights (SDR) (3.0%) and Others (3.9%):
  • Context: SDRs are used by multilateral institutions like the IMF, while “Others” include British Pound and minor currencies. The low SDR share reflects limited IMF financing in June 2025.
  • Implications: Diversified borrowing in SDRs and other currencies offers some stability but is insufficient to offset USD risks.

Key Takeaway

• The 67.6% USD share exposes Tanzania to significant exchange rate risks, particularly with Shilling depreciation. Diversification into Euros, JPY, and CNY helps but is limited by their smaller shares. Prudent debt management and revenue mobilization are critical to mitigate currency risks.

The following table consolidates the key figures for June 2025:

Policy Implications and Insights

1. Central Government Borrowing:
   • The central government’s 85.4% share of external debt aligns with its role in funding infrastructure and social services, as seen in the TZS 937.3 billion development expenditure in May 2025. However, this concentrates repayment risks on public finances, requiring robust revenue mobilization (e.g., TZS 2,880.2 billion in May 2025).
   • The low interest arrears (USD 78.7 million) indicate effective debt management, supported by concessional loans from multilateral creditors (54.5% of debt).
2. Private Sector Constraints:
   • The private sector’s 14.6% share and higher arrears (USD 189.9 million) suggest challenges in accessing and servicing foreign credit, potentially due to USD appreciation or global tightening. This aligns with TICGL’s observation of declining private sector borrowing slowing economic diversification.
3. Sectoral Allocation:
   • The focus on Transport & Telecommunication (25.4%) and Social Welfare & Education (21.3%) supports Tanzania’s Vision 2050 goals of connectivity and human capital development. However, the low shares for agriculture (6.5%) and industry (4.0%) may hinder inclusive growth, given agriculture’s role in employment and GDP.
4. Currency Risks:
   • The 67.6% USD share exposes Tanzania to exchange rate risks, as noted by The Citizen, with Shilling depreciation increasing debt servicing costs. The African Development Bank emphasizes the need for domestic revenue mobilization to mitigate these risks.
   • Diversification into Euros (17.2%) and other currencies is positive but insufficient to offset USD dominance.
5. Debt Sustainability:
   • The IMF’s 2024 Debt Sustainability Analysis (DSA) indicates a moderate risk of external debt distress, with public debt at 45.5% of GDP in 2022/23, well below the 55% benchmark. The slight debt increase in June 2025 suggests controlled borrowing, but monitoring debt servicing capacity is critical, given annual costs absorb ~40% of expenditures.

Strong tax revenue performance (TZS 2,339.7 billion in May 2025, 4.1% above target) supports debt servicing but requires sustained efforts to reduce reliance on budget support loans (15.2%)

Tanzania, a vibrant East African nation known for its cultural diversity and natural beauty, offers a relatively affordable cost of living compared to Western countries, making it an appealing destination for residents and expatriates alike. However, for the average Tanzania earning a monthly net salary of 693,333.33 TSh (Tanzania Shillings), managing daily expenses can be challenging. According to recent data, the estimated monthly costs, excluding rent, are 1,240,012.40 TSh for a single person and 4,293,375.00 TSh for a family of four, representing 178.8% and 619.2% of the average salary, respectively. Rent further strains budgets, with a one-bedroom apartment outside city centers averaging 454,074.67 TSh (65.5% of the salary) and a three-bedroom apartment at 934,804.40 TSh (134.9% of the salary). While Tanzania’s cost of living is 54.1% lower than in the United States and rent is 80.6% lower, the disparity between local income and expenses highlights the need for careful budgeting, particularly for families. This introduction sets the stage for a detailed analysis of how key living costs—such as food, housing, transportation, and childcare—impact the financial realities of Tanzanias as of June 2025.

Cost of Living in Tanzania in Relation to Average Income

Understanding the cost of living in Tanzania, particularly in the context of the average monthly income, is essential for assessing the financial realities faced by Tanzanias. This analysis uses collected data to present a clear picture of living expenses across various categories, with a specific focus on how these costs align with the average monthly net salary of 693,333.33 TSh (Tanzania Shillings).

All figures are in TSh, and the analysis reflects conditions as of June 2025. The goal is to provide a realistic perspective on affordability for the average Tanzania, supported by detailed figures.

Overview of Cost of Living and Income

The cost of living in Tanzania is significantly lower than in the United States, with overall expenses 54.1% lower and rent 80.6% lower. The estimated monthly costs, excluding rent, are:

• Single Person: 1,240,012.4 TSh
• Family of Four: 4,293,375.0 TSh

However, the average monthly net salary (after tax) is 693,333.33 TSh, which poses challenges for covering these expenses, especially for single-income households or families. Below, we break down key cost categories and analyze their affordability relative to this income level.

1. Food and Dining Costs

Food expenses, including dining out and groceries, are a significant part of monthly budgets. Here’s how they compare to the average salary:

• Restaurants:
  • Inexpensive Meal: 6,500 TSh (range: 3,000–15,000 TSh)
  • Mid-range Restaurant (Three-Course Meal for Two): 50,000 TSh (range: 30,000–120,000 TSh)
  • Cappuccino: 4,969.82 TSh (range: 2,000–7,500 TSh)
  • Coke/Pepsi (0.33-liter): 944.12 TSh (range: 700–1,500 TSh)
• Markets:
  • Milk (1 liter): 2,442.11 TSh (range: 1,500–4,000 TSh)
  • Loaf of Bread (500g): 2,028.12 TSh (range: 1,000–3,500 TSh)
  • Rice (1kg): 2,700 TSh (range: 2,000–3,500 TSh)
  • Eggs (12): 5,336.47 TSh (range: 3,600–8,400 TSh)
  • Chicken Fillets (1kg): 13,400 TSh (range: 6,000–18,000 TSh)
  • Bananas (1kg): 2,408.33 TSh (range: 1,500–5,000 TSh)

Affordability Analysis:

• A single person eating out occasionally (e.g., 5 inexpensive meals per month) would spend 32,500 TSh (5 × 6,500). For groceries, a basic weekly shopping list (1kg rice, 1 liter milk, 12 eggs, 1kg bananas) costs approximately 12,886.91 TSh, or 51,547.64 TSh monthly.
• Total food cost for a single person: ~84,047.64 TSh (12.1% of the average salary).
• For a family of four, grocery costs could quadruple (e.g., 206,190.56 TSh), and occasional dining out (e.g., one mid-range meal for two adults monthly) adds 50,000 TSh, totaling ~256,190.56 TSh (36.9% of the average salary).
• Conclusion: Food is relatively affordable for singles, but families face a significant burden, consuming over a third of the average income.

2. Housing Costs (Rent)

Housing is one of the most affordable aspects of living in Tanzania compared to Western standards, but it remains a challenge relative to local income.

• 1-Bedroom Apartment in City Centre: 1,039,418.93 TSh (range: 300,000–2,685,704 TSh)
• 1-Bedroom Apartment Outside City Centre: 454,074.67 TSh (range: 250,000–1,000,000 TSh)
• 3-Bedroom Apartment in City Centre: 1,985,841.16 TSh (range: 537,140.80–4,834,267.20 TSh)
• 3-Bedroom Apartment Outside City Centre: 934,804.40 TSh (range: 300,000–2,685,704 TSh)

Affordability Analysis:

• A single person renting a 1-bedroom apartment outside the city centre spends 454,074.67 TSh, which is 65.5% of the average salary (693,333.33 TSh). Opting for the lower end of the range (250,000 TSh) reduces this to 36.1%.
• A family of four renting a 3-bedroom apartment outside the city centre spends 934,804.40 TSh, or 134.9% of the average salary, making it unaffordable for a single-income household. Even at the lower end (300,000 TSh), it’s 43.3% of the salary.
• Conclusion: Rent is a major expense, especially for families. Singles can manage with budget options, but families likely require dual incomes or cheaper housing options.

3. Transportation Costs

Transportation options include public transport, taxis, and personal vehicles, with costs varying by mode.

• One-way Ticket (Local Transport): 725 TSh (range: 600–2,000 TSh)
• Monthly Pass (Regular Price): 45,000 TSh (range: 21,739.13–52,000 TSh)
• Taxi Start (Normal Tariff): 3,750 TSh (range: 3,750–5,000 TSh)
• Taxi 1km (Normal Tariff): 4,000 TSh (range: 3,000–5,000 TSh)
• Gasoline (1 liter): 3,107.78 TSh (range: 2,900–3,300 TSh)

Affordability Analysis:

• A single person using public transport (monthly pass) spends 45,000 TSh, or 6.5% of the average salary. Alternatively, 20 one-way tickets monthly (e.g., for work) cost 14,500 TSh (20 × 725), or 2.1% of the salary.
• A family might rely on taxis for occasional trips. A 5km taxi ride costs 23,750 TSh (3,750 + 5 × 4,000). Two such trips weekly total 190,000 TSh monthly, or 27.4% of the salary.
• Conclusion: Public transport is highly affordable, but reliance on taxis significantly increases costs, especially for families.

4. Utilities and Connectivity

Utilities and communication are essential expenses that add to the monthly budget.

• Basic Utilities (85m² Apartment): 168,125 TSh (range: 63,750–300,000 TSh)
• Mobile Phone Plan (Calls + 10GB Data): 27,928.57 TSh (range: 10,000–50,000 TSh)
• Internet (60 Mbps, Unlimited Data): 98,222.22 TSh (range: 60,000–150,000 TSh)

Affordability Analysis:

• For a single person, basic utilities (at the lower end, 63,750 TSh) and a mobile plan (27,928.57 TSh) total 91,678.57 TSh, or 13.2% of the average salary. Adding internet (98,222.22 TSh) increases this to 189,900.79 TSh, or 27.4%.
• A family in an 85m² apartment might pay the average 168,125 TSh for utilities, plus two mobile plans (55,857.14 TSh) and internet (98,222.22 TSh), totaling 322,204.36 TSh, or 46.5% of the salary.
• Conclusion: Utilities are a significant expense, particularly for families, and can consume nearly half the average salary when including internet.

5. Other Essential Costs

Additional expenses like childcare, clothing, and leisure impact affordability, especially for families.

• Childcare:
  • Preschool (Monthly): 756,250 TSh (range: 375,000–1,300,000 TSh)
• Clothing:
  • 1 Pair of Jeans: 42,500 TSh (range: 20,000–60,000 TSh)
  • 1 Pair of Nike Shoes: 77,500 TSh (range: 45,000–100,000 TSh)
• Leisure:
  • Cinema (1 Seat): 12,000 TSh (range: 10,000–25,000 TSh)
  • Fitness Club (Monthly): 158,571.43 TSh (range: 55,000–250,000 TSh)

Affordability Analysis:

• A single person might spend 42,500 TSh on clothing annually (e.g., one pair of jeans) and 12,000 TSh monthly on leisure (e.g., one cinema visit), totaling 15,750 TSh monthly (assuming clothing is amortized over 12 months). This is 2.3% of the salary.
• A family with one child in preschool (756,250 TSh) faces a massive expense, equivalent to 109.1% of the average salary, making it unaffordable without additional income.
• Conclusion: Childcare is prohibitively expensive, while clothing and leisure are manageable for singles but add up for families.

Budget Scenarios Relative to Average Salary

Single Person

• Food: 84,047.64 TSh (groceries + occasional dining)
• Rent (1-Bedroom, Outside City Centre): 454,074.67 TSh (average) or 250,000 TSh (low-end)
• Transportation (Monthly Pass): 45,000 TSh
• Utilities (Basic + Mobile): 91,678.57 TSh
• Total (Average Rent): 674,800.21 TSh (~97.4% of 693,333.33 TSh)
• Total (Low-end Rent): 470,726.21 TSh (~67.9% of salary)

Analysis: A single person can live modestly within the average salary by choosing low-end rent and minimizing discretionary spending (e.g., avoiding internet or frequent dining). However, there’s little room for savings or unexpected expenses.

Family of Four (Single Income)

• Food: 256,190.56 TSh
• Rent (3-Bedroom, Outside City Centre): 934,804.40 TSh (average) or 300,000 TSh (low-end)
• Transportation (Two Monthly Passes): 90,000 TSh
• Utilities (Basic + Two Mobile Plans + Internet): 322,204.36 TSh
• Childcare (One Child in Preschool): 756,250 TSh
• Total (Average Rent): 2,359,449.36 TSh (340.3% of salary)
• Total (Low-end Rent): 1,724,644.96 TSh (248.8% of salary)

Analysis: A single income of 693,333.33 TSh is insufficient for a family of four, especially with childcare costs. Dual incomes or significantly reduced expenses (e.g., no preschool, cheaper housing) are necessary.

Key Insights and Challenges

1. Low Income Relative to Costs: The average salary (693,333.33 TSh) barely covers the estimated monthly costs for a single person (1,240,012.4 TSh, excluding rent) and is far inadequate for a family of four (4,293,375 TSh, excluding rent). This highlights a significant affordability gap.
2. Housing and Childcare as Major Burdens: Rent and childcare are the largest expenses. For families, preschool costs alone can exceed the average salary, making quality education inaccessible for many.
3. Affordable Basics: Food (especially groceries) and public transportation are relatively affordable, allowing budget-conscious individuals to manage these costs within the average salary.
4. Need for Multiple Incomes: Families relying on a single income face severe financial strain. Dual incomes or informal income sources (e.g., small businesses) are likely common among Tanzanias to bridge the gap.
5. Limited Savings Potential: With basic expenses consuming most of the average salary, saving for emergencies, education, or homeownership (with high mortgage rates of 14.6%) is challenging.

Conclusion

The cost of living in Tanzania is low compared to Western standards, but the average monthly net salary of 693,333.33 TSh makes it difficult for many Tanzanias to afford a comfortable lifestyle, especially for families. Singles can manage by opting for budget housing, public transport, and minimal discretionary spending, but families face significant challenges, particularly with childcare and rent. To improve financial stability, Tanzanias may need to pursue higher-paying jobs, multiple income streams, or cost-saving strategies like living in less expensive areas or relying on local markets. This analysis underscores the importance of aligning expenses with income and highlights the economic realities faced by the average Tanzania.

Key Cost of Living Figures in Tanzania Relative to Average Salary

Below is a table summarizing key cost of living figures in Tanzania, with a focus on their affordability relative to the average monthly net salary of 693,333.33 TSh (Tanzania Shillings). The table includes average costs, ranges, and the percentage of the average salary each item represents, providing a clear picture of financial realities for Tanzanias as of June 2025.

Notes:

• Costs are in Tanzania Shillings (TSh) and reflect averages and ranges from the provided document.
• The percentage of average salary is calculated as (Average Cost ÷ 693,333.33) × 100.
• Key insights:
  • The monthly cost for a single person (excl. rent) exceeds the average salary by 78.8%, and for a family of four, it’s over 6 times the salary.
  • Rent and childcare are particularly burdensome, with preschool costs alone exceeding the average salary.
  • Affordable categories include public transport (e.g., 0.1% per one-way ticket) and basic groceries (e.g., 0.3–0.4% per kg of rice or bananas).
• Data reflects conditions as of June 2025.

Fixing Tanzania's Local Government PPP Projects Through Strategic Fiscal Reforms

TICGL’s Economic Research Centre has published a groundbreaking research paper authored by Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com) and Amran Bhuzohera, which examines the budgetary deviations, implementation challenges, and allocation inefficiencies affecting Local Government Authority (LGA)-initiated Public-Private Partnership (PPP) projects in Tanzania between 2021/2022 and 2024/2025.

The study provides a detailed analysis of how financial misalignments and operational gaps hinder project performance and service delivery at the local level. Leveraging Dr. Kahyoza’s expertise in financial modeling, valuation, and PPP management, the paper offers evidence-based recommendations to strengthen fiscal discipline, enhance accountability, and improve the overall effectiveness of Tanzania’s decentralized PPP framework.

With 184 local councils serving as the primary initiators of PPP projects under the PPP Act of 2010 (amended 2023), these decentralized partnerships are essential for delivering infrastructure and services in housing, transportation, water, and health. However, the paper reveals that persistent fiscal constraints and institutional bottlenecks have undermined the PPP model's potential, threatening Tanzania's ability to meet its Development Vision 2025 goals.

Key Findings and Insights

• Massive budgetary shortfall: Across 32 analyzed LGA-led PPP projects, the total budgetary deviation reached 35.4% (TZS 6.53 trillion), with actual allocations totaling only TZS 11.92 trillion against planned budgets of TZS 18.45 trillion.
• High implementation shift rates: A staggering 56% of projects shifted away from the PPP model to traditional public funding or hybrid arrangements, primarily due to funding gaps (42%), regulatory delays (28%), and private sector reluctance (17%).
• Below-threshold allocations: The average allocation percentage stood at just 64.6%—falling short of the 70% viability threshold needed for sustainable PPP implementation. Health sectors were hit hardest with only 60.3% allocation, while transport managed 65.2%.
• Sectoral disparities: Social sectors like health (39.7% deviation) and education (37.5% deviation) faced the worst funding gaps, while flagship infrastructure projects in transport and energy received relatively better allocations due to national priority status.
• Fiscal federalism constraints: LGAs receive only 20% of national revenue through formula-based transfers (TZS 1.36 trillion in 2024/25), severely limiting their capacity to commit matching funds for PPP projects—well below the East African average of 40%.
• Peak crisis period: The fiscal year 2023/24 saw the highest deviation rate of 47.4% and shift incidence of 67%, driven by post-COVID inflation (4.2% CPI), rising interest rates (15%), and global economic shocks.

Policy Gaps and Opportunities

While Tanzania's Third National Five-Year Development Plan (FYDP III) for 2021/22–2025/26 and the National PPP Policy (2023) provide a robust legal and strategic framework, implementation gaps persist—particularly in sub-national fiscal allocation, procurement efficiency, and risk-sharing mechanisms.

Key structural constraints include:

• Severe under-allocation to LGA-initiated projects compared to national infrastructure priorities.
• Procurement approval delays averaging 9 months through the PPP Centre, discouraging private investor confidence.
• Limited LGA institutional capacity, with 70% of councils lacking adequate procurement and financial management expertise.
• Weak risk-sharing frameworks that fail to attract private sector participation, especially in social sectors.

Policy Recommendations

To unlock the transformative potential of LGA-led PPPs and save an estimated TZS 2.61 trillion through private sector leverage, the paper proposes a comprehensive reform agenda:

1. Ring-Fenced LGA Transfers: Earmark 25% of the annual development budget (e.g., TZS 1.41 trillion from 2025/26's TZS 5.65 trillion) exclusively for PPP matching funds, prioritizing high-deviation sectors like health and water to raise allocations to 75%.
2. Fast-Track Regulatory Approvals: Implement a digital approval portal through the PPP Centre with a 6-month cap on procurement processes, reducing regulatory delays by 30% and increasing project retention rates by 20%.
3. Sector-Specific Investment Incentives: Offer 10-year tax rebates for private investors in energy, water, and health PPPs to counter risk aversion and attract 20% more private capital into underserved sectors.
4. Mandatory Capacity-Building Programs: Establish compulsory training in procurement, risk assessment, and financial management for 70% of LGA councils (approximately 129 councils), funded through the Local Government Capital Development Trust Fund at TZS 500 billion annually.
5. Tripartite Oversight Mechanism: Create collaborative monitoring structures involving the Ministry of Finance, PPP Centre, and LGAs with annual performance audits aligned to FYDP III metrics, ensuring transparency and accountability.

Conclusion

Tanzania's Local Government Authorities hold immense potential as drivers of decentralized development through PPPs. However, without urgent fiscal reforms and institutional strengthening, the country risks losing trillions of shillings in private sector investment and falling short of its infrastructure development targets.

The authors emphasize that fixing LGA-led PPPs is not merely a budgetary exercise—it is a strategic imperative for inclusive growth, service delivery, and fiscal sustainability. With the proposed reforms, Tanzania can reduce budgetary deviations to 20-25%, increase allocation efficiencies to 75%, and position LGAs as catalysts for the PPP-driven transformation envisioned in Development Vision 2025.

By 2030, with well-implemented reforms, Tanzania could emerge as an East African leader in sub-national PPP governance, demonstrating how decentralized partnerships can bridge infrastructure gaps and empower local communities.

📘 Read the Full Research Paper:
"Local Government-Initiated Public-Private Partnership (PPP) Projects: Analyzing Budgetary Deviations, Allocations, and Implementation Shifts in Tanzania, 2021/2022–2024/2025"
Authored by Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com) and Amran Bhuzohera
Published by TICGL | Tanzania Investment and Consultant Group Ltd
🌐 www.ticgl.com