A Comprehensive Analysis of Tanzanian Shilling Performance (2021-2026)
The Tanzanian Shilling (TZS) has experienced significant shifts against the US Dollar (USD) between 2021 and 2026, with exchange rate movements closely tracking global dollar dynamics and United States monetary policy decisions. This comprehensive analysis examines how the Federal Reserve's interest rate policies, global liquidity conditions, and Tanzania's domestic economic fundamentals have interacted to shape currency performance over this critical five-year period.
The TZS remained remarkably stable during this period, with minimal annual changes of less than 1%. This coincided with accommodative global financial conditions following the COVID-19 pandemic, as the US Federal Reserve maintained near-zero interest rates and continued large-scale asset purchases.
| Year | Average Rate (1 USD = TZS) | Lowest Rate | Highest Rate | Annual Change | Key Drivers |
|---|---|---|---|---|---|
| 2021 | ~2,314 | ~2,300 | ~2,324 | -0.5% | Stable period, minimal depreciation |
| 2022 | ~2,326 | ~2,300 | ~2,342 | +0.5-1% | Mild TZS weakening begins |
| 2023 | ~2,422-2,510 | ~2,332 | ~2,519 | +7-8% | Fed aggressive rate hikes, strongest depreciation |
| 2024 | ~2,609-2,615 | ~2,352 | ~2,744 | -3-4% (from 2023 avg) | High volatility, year-end strengthening (~2,445) |
| 2025 | ~2,560-2,584 | ~2,420-2,425 | ~2,701 | +2-3% | Moderate depreciation, mid-year peak then stabilization |
The year 2023 marked the most significant depreciation episode for the Tanzanian Shilling, with the currency weakening by approximately 7-8% against the USD. This sharp movement was not coincidental but directly aligned with the US Federal Reserve's aggressive monetary tightening cycle implemented to combat persistent inflation in the United States.
Key Insight: The 2023 depreciation demonstrates how emerging market currencies like the TZS remain vulnerable to external monetary shocks, even when domestic fundamentals are sound. Tanzania maintained GDP growth averaging 5-6%, inflation within the 3-5% target range, and adequate foreign reserves covering 4-4.5 months of imports, yet could not fully insulate itself from global dollar dynamics.
The TZS/USD exchange rate exhibited unprecedented volatility in 2024, with intra-year swings ranging between TZS 2,352 and TZS 2,744 per USD—a remarkable 392 TZS range. This volatility reflected global market uncertainty surrounding the future trajectory of US monetary policy.
Despite exchange rate pressures, Tanzania has demonstrated strong macroeconomic fundamentals throughout the 2021-2025 period, positioning the country as a resilient lower-middle-income economy transitioning toward upper-middle-income status in line with Vision 2025 and 2050 goals.
| Indicator | Recent Performance | 2026 Projection | Development Impact |
|---|---|---|---|
| Real GDP Growth | ~5.3% (2023) → 5.5-6% (2024-2025) | 6.3% (IMF) | Job creation, infrastructure expansion, poverty reduction |
| Inflation Rate | ~3.3-3.8% (2023-2025) | 3.5% | Stable purchasing power, contained import costs |
| Current Account Deficit | Narrowed to ~2.6-4% of GDP | Improving | Reduced external vulnerability, sustainable financing |
| Foreign Reserves | ~4-4.5 months of imports | Stable | Buffer against shocks, policy flexibility |
| Public Debt | ~45-49% of GDP | Manageable | Fiscal sustainability, development financing capacity |
As of Mid-January 2026: The TZS/USD mid-market rate stands at approximately TZS 2,497-2,500 per USD, representing slight weakening from the 2025 year-end level of around TZS 2,460. This suggests early mild depreciation pressure in 2026, likely driven by ongoing uncertainty about US Federal Reserve policy timing and trajectory.
| Source/Analysis | Predicted Range for 2026 | Year-End Estimate | Key Assumptions |
|---|---|---|---|
| Trading Economics Models | ~2,476 (Q1) → ~2,403 (12 months) | Potential mild strengthening | Global factors favor TZS if Fed cuts materialize |
| CoinCodex / Algorithmic | ~2,464-2,704 (avg ~2,569) | Up to ~2,704 max | Gradual TZS weakening, bullish for USD |
| Gov.Capital / WalletInvestor | ~2,701 mid-year → ~2,571-2,581 | ~2,600-2,700 | Moderate depreciation (~5%) |
| Market Consensus | 2,500-2,700 | ~2,600+ | Fed cuts potentially capping USD strength |
Most analysts converge on a TZS 2,500-2,700 range for 2026, with a likely year-end position around TZS 2,600-2,700 per USD. This implies mild continued depreciation of approximately 3-8% from current levels, though significant Fed rate cuts or strong Tanzanian investment inflows could moderate or reverse this trend.
It is critical to interpret the TZS depreciation not solely as economic weakness but as a complex phenomenon reflecting Tanzania's development trajectory and position in the global financial system.
Policy Implication: The optimal approach involves allowing gradual, market-driven adjustment while using foreign reserves and monetary policy tools to prevent disorderly movements. Tanzania's maintenance of 4-4.5 months of import cover provides adequate policy space for such intervention.
The evolution of the TZS/USD exchange rate over the 2021-2025 period provides compelling evidence that global dollar dynamics and US monetary policy have been the dominant external drivers of exchange rate movements in Tanzania. While domestic fundamentals remained broadly stable—characterized by robust GDP growth averaging 5-6%, low inflation within the 3-5% target range, and adequate foreign exchange reserves—these strengths were insufficient to fully counteract the global tightening of dollar liquidity.
The most pronounced depreciation episode in 2023, when the shilling weakened by 7-8%, coincided directly with the US Federal Reserve's aggressive interest rate hikes. This underscores how shifts in US monetary policy rapidly transmit to emerging and developing economies through capital flows, trade financing costs, and investor portfolio rebalancing. Subsequent volatility in 2024 and moderate depreciation in 2025 further illustrate that expectations surrounding future US rate cuts can significantly influence exchange rate behavior even in the absence of domestic macroeconomic instability.
Importantly, Tanzania's exchange rate depreciation should not be interpreted solely as a sign of economic weakness. Rather, it reflects a combination of structural demand for foreign exchange linked to development-driven imports, the global dominance of the US dollar, and cyclical shifts in international financial conditions. Controlled and gradual depreciation has enhanced export competitiveness in sectors such as gold, tourism, and agriculture, partially offsetting external pressures.
Looking ahead to 2026, with most forecasts placing the TZS/USD rate within the 2,500-2,700 range, the outlook will remain closely tied to the trajectory of US monetary easing, global risk sentiment, and Tanzania's ability to sustain export growth and foreign inflows. Prudent exchange rate management by the Bank of Tanzania, continued inflation control, and export diversification will be essential to mitigating excessive volatility while allowing the exchange rate to adjust in line with underlying economic fundamentals.
Critical Lesson for Developing Economies: Even with sound domestic policies, exchange rate outcomes are increasingly shaped by global monetary forces, reinforcing the need for resilience, policy flexibility, and strategic integration into the global financial system.
Insights from Tanzania Investment and Consultant Group Ltd (TICGL)
By Amran Bhuzohera, Economist – TICGL
As Tanzania moves confidently toward its Vision 2050 goals, we stand at a defining moment in our nation’s economic journey. Across the country, the energy for progress is visible — from infrastructure expansion and industrial growth to innovations in agriculture and digital transformation. Yet, unlocking the full potential of these business and investment opportunities requires a clear understanding of our local markets, institutional frameworks, and the dynamics that drive both public and private investment.
At TICGL, this is exactly what we do.
As an Economist at TICGL, We have seen first-hand how data-driven insights can turn ambitious ideas into sustainable investments. TICGL is more than a consulting firm — we are a bridge between economic knowledge and strategic action. Our work helps investors, policymakers, and entrepreneurs navigate Tanzania’s evolving investment environment with clarity and confidence.
We combine local expertise with global standards to provide our clients with evidence-based analysis, advisory support, and market intelligence. Our mission is simple: to empower decisions that create value, jobs, and long-term growth for Tanzania.
At TICGL, our services are designed to serve the entire investment ecosystem:
One of our most exciting initiatives is the Tanzania Investment Portfolio (TIP) — a comprehensive compilation of both public and private investment projects, as well as PPP initiatives from across the country.
This portfolio showcases over 100 investment and business opportunities across sectors such as energy, agriculture, tourism, transport, manufacturing, mining, real estate, and technology. It highlights Tanzania’s diverse economic potential and the unique local advantages that make each project both viable and impactful.
More importantly, the TIP is built to help investors understand Tanzania from the inside out — its policies, institutions, and emerging market realities.
Tanzania’s steady growth, political stability, and demographic momentum make it one of Africa’s most promising investment frontiers. By 2050, with a projected population of over 114 million, our domestic market will be one of the largest in the region.
At TICGL, we believe that informed investment is the key to unlocking this potential — turning opportunities into industries, and industries into livelihoods. Through our research and advisory work, we continue to connect vision with opportunity, and ideas with action.
We invite investors, development partners, and business leaders to engage with TICGL and explore the Tanzania Investment Portfolio. Together, we can shape an investment environment that is inclusive, data-driven, and globally competitive — one that reflects Tanzania’s growing confidence on the continental and international stage.
📍 Head Office: Dar es Salaam, Tanzania
🌐 Website: www.ticgl.com
📧 Email: economist@ticgl.com
📞 Phone: +255 768 699 002
Between 2020 and 2024, Tanzania experienced a remarkable surge in investment activities, signaling growing confidence in the country's economic prospects. The number of projects registered by the Tanzania Investment Centre (TIC) increased from 207 in 2020 to 901 in 2024 — a 335% growth over five years. At the same time, total capital investment rose sharply from $1.1 billion to $9.3 billion, marking a 745% increase. Job creation linked to these projects also soared by 1,121%, with employment opportunities growing from 17,385 in 2020 to 212,293 in 2024. This rapid expansion reflects both domestic and foreign investor confidence, with domestic projects growing by 402%, foreign projects by 399%, and joint ventures by 184%. Key sectors like manufacturing, agriculture, commercial real estate, transportation, and telecommunications attracted the largest share of capital and created substantial jobs, demonstrating Tanzania’s ongoing transformation into a vibrant investment hub.
| Year | Total Projects | Domestic Projects | Foreign Projects | Joint Venture Projects | Jobs Created | Capital Investment (US$ Billion) |
| 2020 | 207 | 64 | 81 | 62 | 17,385 | 1.1 |
| 2021 | 256 | 75 | 114 | 67 | 40,889 | 3.8 |
| 2022 | 293 | 99 | 112 | 82 | 53,025 | 4.5 |
| 2023 | 526 | 182 | 214 | 130 | 137,010 | 5.7 |
| 2024 | 901 | 321 | 404 | 176 | 212,293 | 9.3 |
Expansion Projects (January-December 2024)
Total expansion projects: 51 projects across various sectors.
Sectors by Project Count
Total projects: 901 The document doesn't provide the exact number for each sector, but visually it appears manufacturing has the highest number of projects, followed by commercial buildings and services.
Jobs Created by Sector (January-December 2024)
Total jobs: 212,293 Top sectors for job creation:
Capital Investment by Sector (January-December 2024)
Total investment: $9.3 billion Top sectors receiving investment:
Foreign Direct Investment (FDI)
Top 5 Sources of FDI in 2024
Top 5 Sources of FDI in 2023
Permits, Licenses and Approvals (2024 vs 2023)
The document shows a significant increase in permits, licenses, and approvals issued in 2024 compared to 2023, though the exact numbers aren't clearly visible in the document. The figure shows increases across multiple institutions including Immigration (residence permits), Labor Office (work permits), TRA (approved lists of exemptions), NIDA (legal identity card/NIN), TIC (certificate of incentives), and Ministry of Lands (derivative rights).
This analysis shows Tanzania's continued growth in investment across various sectors and regions, with significant increases in both domestic and foreign investments over the five-year period.
1. Massive Growth in Investment Activity
2. Balanced Growth Between Domestic and Foreign Investments
3. Joint Ventures Growing, But More Slowly
4. Exceptional Job Creation
5. Sharp Increase in Capital Investment
6. Sectoral Insights
7. Changes in Project Ownership Structure
8. Foreign Direct Investment (FDI) Dynamics
9. Administrative Improvements
10. Regional Distribution
In Summary:
Project Ownership Distribution (%)
| Ownership Type | 2023 | 2024 | Change |
| Foreign | 40.7% | 44.8% | +4.1% |
| Domestic | 34.6% | 35.6% | +1.0% |
| Joint Venture | 24.7% | 19.6% | -5.1% |
Top 5 Sectors by Job Creation (2024)
| Sector | Jobs Created |
| Commercial Building | 125,760 |
| Manufacturing | 45,883 |
| Economic Infrastructure | 18,780 |
| Transportation | 7,475 |
| Tourism | 6,949 |
Top 5 Sectors by Capital Investment (2024)
| Sector | Capital Investment (USD Million) |
| Manufacturing | 2,192.56 |
| Agriculture | 1,891.42 |
| Commercial Building | 788.86 |
| Transportation | 706.39 |
| Telecommunication | 651.92 |
Top 5 Sources of FDI
| Country | 2023 (USD Million) | 2024 (USD Million) | Change |
| China | 2,111.41 | 1,053.46 | -50.1% |
| Vietnam | - | 783.40 | New |
| Mauritius | - | 773.96 | New |
| UAE | - | 702.52 | New |
| United Kingdom | - | 394.30 | New |
| India | 190.53 | - | - |
| Singapore | 143.29 | - | - |
| Hong Kong | 135.00 | - | - |
| Germany | 131.25 | - | - |
Top 10 Regional Distribution (2024)
| Region | Projects | Jobs Created | Capital Investment (USD Million) |
| Dar es Salaam | 356 | 107,962 | 4,440.97 |
| Pwani | 166 | 49,784 | 1,243.87 |
| Ruvuma | 11 | 5,735 | 597.64 |
| Mwanza | 37 | 4,395 | 581.11 |
| Morogoro | 22 | 11,556 | 446.17 |
| Shinyanga | 16 | 1,121 | 415.21 |
| Arusha | 64 | 6,657 | 213.06 |
| Dodoma | 47 | 6,540 | 182.36 |
| Kigoma | 8 | 774 | 155.62 |
| Tanga | 23 | 1,315 | 137.66 |
Macroeconomic Indicators (2024)
| Indicator | Value |
| GDP Growth Rate | 5.4% |
| Inflation Rate | 3.1% |
| Total Population | 66,278,276 |
| TSH/USD Exchange Rate (Buying) | 2,643.12 |
| TSH/USD Exchange Rate (Selling) | 2,668.42 |
Tanzania’s inflation rate of 3.0% in October 2024 highlights its remarkable economic stability, outperforming many African countries. With projections of further decline to 2.5% by 2026, Tanzania’s prudent fiscal and monetary policies position it as a competitive and attractive destination for investment and trade in East Africa and beyond.
Tanzania's Inflation Overview:
Comparison with East African Countries:
Comparison with African Countries:
Insights:
Strategic Outlook for Tanzania:
Tanzania’s controlled inflation tells a story of economic discipline, regional competitiveness, and future potential. It positions the country as a stable and attractive hub for business and investment in Africa.