By Dr. Bravious Kahyoza, PhD, Senior Economist at TICGL

As Tanzania moves from Vision 2025 to Vision 2050, the nation stands at a pivotal moment of opportunity and challenge. Vision 2025 aimed to transform Tanzania into a middle-income country with a competitive economy, improved infrastructure, and enhanced governance. While significant progress was made, the goals of poverty reduction and equitable development were not fully realized.

Vision 2050 presents a bolder and more expansive strategy, focusing on industrialization, infrastructure development, and social inclusion. Achieving these ambitious targets will require addressing the shortcomings of Vision 2025, with a particular emphasis on leveraging Public-Private Partnerships (PPPs) more effectively.

Challenges and Lessons from Vision 2025

One of the major shortcomings of Vision 2025 was the limited impact on poverty reduction despite steady economic growth. Tanzania's GDP growth averaged 6% annually, yet by the end of the period, 26.4% of the population still lived below the poverty line.

This disparity highlights a critical issue: economic growth alone does not automatically translate into improved living standards. The limited involvement of the private sector in rural development further exacerbated inequalities, as much of the population remains dependent on agriculture, which continues to suffer from underinvestment and outdated practices.

PPPs, identified as a key avenue for development under Vision 2025, did not always deliver the expected impact. Large-scale infrastructure projects, such as the expansion of the Dar es Salaam Port and the Julius Nyerere Hydropower Project, contributed to national development but primarily benefited urban centers.

These initiatives failed to directly address rural poverty, particularly in agriculture, which remains the backbone of Tanzania's economy. The lack of strategic PPPs in agriculture meant that smallholder farmers had limited access to modern technologies, irrigation systems, and financial services that could have improved productivity and livelihoods.

Vision 2050: A More Strategic Approach to PPPs

Looking ahead, Vision 2050 sets even more ambitious goals, aiming for Tanzania to become an upper-middle-income country with a GDP exceeding USD $1 trillion and per capita income of USD 8,600. Achieving these targets requires a more effective and strategic approach to PPPs. Industrialization is a central pillar of Vision 2050, with a focus on agriculture, manufacturing, and energy. Economic metrics show that Tanzania's future will be defined by its ability to industrialize while ensuring inclusive and equitable growth. This will necessitate a thriving private sector capable of supporting this ambitious agenda.

Economic analysts argue that Tanzania cannot achieve upper-middle-income status without fostering a robust private sector. A strong private sector is the foundation of industrialization, and the government must create an environment conducive to private investment. This includes improving infrastructure, ensuring a predictable regulatory framework, and expanding access to finance.

However, challenges such as inconsistent policy enforcement, limited capital access, and insufficient technical skills continue to hinder private sector growth. Overcoming these barriers will be critical for realizing Vision 2050.

Enhancing PPPs for Sustainable Development

The role of Public-Private Partnerships (PPPs) in Vision 2050 extends beyond financial investments. The focus must shift toward an integrated approach where the private sector actively participates in key sectors such as education, healthcare, and agriculture.

Vision 2050 aims for universal access to healthcare, requiring significant investments in infrastructure, human capital, and service delivery. PPPs can play a vital role by facilitating the development of hospitals, rural health centers, and affordable healthcare solutions.

Addressing skill gaps through PPP-supported vocational training programs will be essential in aligning the workforce with industrial and technological demands. A well-educated and skilled population is fundamental to Tanzania’s industrialization goals.

Given that agriculture employs over 70% of the population, integrating modern farming techniques and irrigation systems through PPPs can significantly boost productivity. As noted by Professor Damian Gabagambi, transforming Tanzania into a global food production leader requires both technological investments and policy reforms to support smallholder farmers.

Addressing Energy and Infrastructure Challenges

Energy remains a major bottleneck to economic growth. Tanzania's per capita energy consumption is currently around 100 kWh, far below the African average. Vision 2050 aims to increase this to 600 kWh per capita, which will require substantial investments in renewable energy, grid expansion, and energy efficiency projects. The private sector has a crucial role in scaling up energy production, distribution, and innovative solutions such as off-grid renewable energy projects. While initiatives like the Julius Nyerere Hydropower Plant are promising, a broader strategy is needed to fully harness Tanzania’s renewable energy potential.

Additionally, investments in transport infrastructure will be necessary to support economic expansion. Upgrading roads, railways, and ports through well-structured PPPs will enhance logistics, reduce production costs, and improve Tanzania’s competitiveness as a regional trade hub.

Global Lessons and Best Practices

Tanzania can draw valuable lessons from global success stories. China's rapid industrialization, with sustained annual growth rates of 10% between 1978 and 2008, was driven by infrastructure investments, technology adoption, and effective economic policies. Similarly, Botswana’s economic transformation, largely fueled by strategic resource management and political stability, highlights the importance of long-term planning and institutional reforms. While Tanzania’s context differs, these examples offer insights into the strategic investments required for sustainable growth.

Conclusion: The Road Ahead

Vision 2050 presents a roadmap for a prosperous, industrialized, and equitable Tanzania. However, its success will hinge on the country's ability to harness the full potential of the private sector, particularly through well-structured PPPs. The challenges of poverty, infrastructure, and energy shortages cannot be addressed by the government alone. Strategic collaboration with private investors is essential to drive innovation, expand economic opportunities, and create a resilient economy.

While Vision 2025 laid the groundwork for growth, it also underscored the need for a more inclusive and strategic approach. Vision 2050 represents an opportunity to correct past shortcomings by fostering a more conducive investment environment, adopting new technologies, and making bold, transformative investments in key sectors. If Tanzania can successfully implement these strategies, the vision of a thriving, upper-middle-income nation by 2050 can become a reality.

The Tanzania Investment Centre (TIC) Quarterly Bulletin for January to March 2025 (Q3 2024/25) reports a significant 46.72% increase in capital inflow compared to the same period in the previous year (Q3 2023/24), with total capital attracted reaching USD 2,164.7 million compared to USD 1,475.43 million in Q3 2023/24. This growth, coupled with the registration of 199 investment projects expected to generate 24,444 jobs, underscores Tanzania’s robust economic development trajectory. Below, TICGL analyze the sectors driving this capital increase, supported by figures from the document, and explain how they contribute to economic diversification, a critical factor in reducing reliance on traditional sectors and fostering sustainable growth.

Sectors Driving the Capital Inflow Growth

The bulletin highlights notable increases in capital, project numbers, and job opportunities in specific sectors during Q3 2024/25, The key sectors driving the 46.72% capital increase include:

1. Agriculture:
   • Capital Increase: The bulletin notes a “notable increase” in capital in the agriculture sector, though exact capital figures per sector are not provided in the text. However, the sector’s prominence is evident from the number of projects and jobs.
   • Projects and Jobs: Agriculture saw an increase in registered projects and job opportunities. For context, the document highlights specific agricultural projects like the Bugwema Irrigation Scheme (USD 14.89 million, 2,500+ household jobs) and the Usariver Agricultural SEZ, indicating significant investment interest.
   • Figure Reference: Figure 4.2 shows a rise in the number of agricultural projects and jobs compared to Q3 2023/24, suggesting a substantial contribution to the capital inflow.
2. Energy:
   • Capital Increase: The energy sector recorded a significant increase in capital, driven by projects like solar and clean energy initiatives (e.g., inbound missions from China and India focusing on energy).
   • Projects and Jobs: The sector also saw an increase in registered projects and job creation. Figure likely reflects this growth in project numbers.
   • Example Projects: Missions from Japan (energy, February 13, 2025) and India (clean energy, March 28, 2025) indicate targeted investments.
3. Economic Infrastructure:
   • Capital Increase: This sector experienced a notable rise in capital, likely driven by projects like the East Africa Commercial & Logistics Center (EACLC) with an investment exceeding USD 200 million and infrastructure-focused missions (e.g., UAE’s logistics hub interest).
   • Projects and Jobs: The bulletin notes an increase in project numbers and jobs, with Figure 4.2 illustrating this trend.
   • Significance: The EACLC, with its 75,000 square meters and four functional areas (commercial trading, logistics, business district, leisure), is a flagship project enhancing Tanzania’s role as a regional trade hub.
4. Services:
   • Capital Increase: The services sector, encompassing tourism, real estate, and other services, also contributed to the capital surge. Inbound missions from Japan (real estate, February 2025) and Poland (tourism, January 16, 2025) highlight this focus.
   • Projects and Jobs: Figure shows growth in service-related projects and jobs, reflecting investments in tourism and hospitality.
5. Manufacturing:
   • Capital Increase: Despite a slight decrease in the number of projects, the manufacturing sector recorded a 45.87% increase in capital, making it a significant driver of the overall 46.72% capital growth.
   • Projects and Jobs: Figure indicates a slight dip in project numbers but a substantial increase in capital, suggesting larger-scale investments. Examples include Chinese investments in motorcycle assembly, tire manufacturing, and steel production.
   • Specific Investments: The bulletin lists 19 inbound missions from China alone, many focusing on manufacturing sectors like tea processing, building materials, and stainless steel.

Quantitative Breakdown

• Total Capital (Q3 2024/25): USD 2,164.7 million.
• Previous Year (Q3 2023/24): USD 1,475.43 million.
• Increase in Capital: USD 2,164.7M – USD 1,475.43M = USD 689.27 million, equivalent to a 46.72% increase.
• Projects Registered: 199 projects (94 foreign-owned, 66 locally owned, 39 joint ventures).
• Jobs Created: 24,444 jobs.
• Expansion Projects: 9 projects with USD 100.09 million in capital and 1,542 jobs.
• Sectoral Contribution:
  • Agriculture, Energy, Economic Infrastructure, and Services: Increased in projects, jobs, and capital.
  • Manufacturing: 45.87% capital increase, despite fewer projects.

Contribution to Economic Diversification

Economic diversification reduces Tanzania’s reliance on traditional sectors like agriculture and mining, fostering resilience and sustainable growth. The sectors driving the capital inflow contribute to diversification as follows:

1. Agriculture:
   • Diversification Impact: Investments like the Bugwema Irrigation Scheme (USD 14.89 million) and the Usariver Agricultural SEZ modernize agriculture, shifting from subsistence to commercial farming. The Usariver project focuses on horticulture for export, enhancing foreign exchange earnings.
   • Economic Benefits: These projects create over 2,500 household jobs (Bugwema) and boost food security, reducing dependence on rain-fed agriculture. The allocation of 30,000 hectares in Mkulazi for the “Mkulazi Agricultural City” (USD 570 million) supports large-scale agribusiness, diversifying agricultural output.
   • Figure Impact: The increase in agricultural projects supports value-added activities like processing, reducing reliance on raw commodity exports.
2. Energy:
   • Diversification Impact: Investments in solar and clean energy (e.g., Chinese solar project) reduce dependence on traditional energy sources like hydropower, enhancing energy security.
   • Economic Benefits: Energy projects support industrial growth by ensuring reliable power for manufacturing and infrastructure projects like the EACLC. This enables Tanzania to attract more industries, diversifying from agriculture-based revenue.
   • Figure Impact: The rise in energy sector capital reflects investments in renewable energy, aligning with global sustainability trends.
3. Economic Infrastructure:
   • Diversification Impact: The EACLC (USD 200 million+) integrates wholesale, logistics, warehousing, and e-commerce, positioning Tanzania as a regional trade hub. The Standard Gauge Railway (SGR) in Morogoro enhances trade connectivity, opening markets for diverse sectors like horticulture and manufacturing.
   • Economic Benefits: The EACLC is expected to create jobs and boost trade across East Africa, while the SGR supports faster transport of perishable goods, diversifying market access. These projects reduce reliance on traditional trade routes and ports.
   • Figure Impact: Figure shows 73 projects in Dar es Salaam, where EACLC is located, indicating infrastructure’s role in capital attraction.
4. Services:
   • Diversification Impact: Investments in tourism and real estate (e.g., Japanese and Polish missions) diversify Tanzania’s economy by capitalizing on its tourism potential and urban development needs.
   • Economic Benefits: Tourism projects create jobs and foreign exchange, while real estate investments (supported by the 2023 Land Policy) stimulate construction and housing markets, broadening economic activity.
   • Figure Impact: Figure shows increased service sector projects, reflecting growth in non-traditional sectors.
5. Manufacturing:
   • Diversification Impact: The 45.87% capital increase in manufacturing supports industrial growth in areas like tea processing, motorcycle assembly, and steel production. This shifts Tanzania from raw material exports to value-added manufacturing.
   • Economic Benefits: Manufacturing projects create high-skill jobs (e.g., 1,542 jobs from expansion projects) and increase export revenues. The Kibaha Textile SEZ (USD 78.85 million, 38,400 jobs) exemplifies large-scale industrial diversification.
   • Figure Impact: Figure highlights manufacturing’s capital growth, underscoring its role in economic transformation.

Broader Economic Development Impact

• Job Creation: The 24,444 jobs across these sectors reduce unemployment and increase household incomes, boosting domestic consumption and tax revenues.
• FDI and Domestic Investment: The 62.5% increase in joint ventures (39 projects) indicates growing local participation, fostering inclusive growth. Figure shows 94 foreign-owned and 66 locally owned projects, balancing FDI and domestic investment.
• Regional Distribution: Figure shows Dar es Salaam (73 projects), Pwani (48), and Arusha (16), ensuring economic activity spreads beyond urban centers, promoting balanced development.
• Policy Support: The Tanzania Investment and Special Economic Zones Authority Act and the 2023 Land Policy create a conducive environment, encouraging diverse investments. The EACLC’s alignment with the Belt & Road Initiative enhances global trade linkages.

Conclusion

The 46.72% increase in capital inflow to USD 2,164.7 million in Q3 2024/25 was driven by agriculture, energy, economic infrastructure, services, and manufacturing, as evidenced by Figure and specific project data. These sectors contribute to economic diversification by modernizing agriculture, enhancing energy security, improving trade infrastructure, expanding service industries, and boosting manufacturing. Projects like the EACLC (USD 200 million+), Kibaha Textile SEZ (USD 78.85 million), and Bugwema Irrigation Scheme (USD 14.89 million) exemplify this shift, creating jobs, increasing exports, and reducing reliance on traditional sectors. These investments, supported by reforms like TISEZA and the 2023 Land Policy, position Tanzania as a diversified, resilient economy and a leading investment destination in Africa.

This table will provide a clear, concise overview of the figures that illustrate Tanzania’s economic development during Q3 2024/25, as requested, with an emphasis on the 46.72% capital inflow increase and other key metrics.

Explanation of the Table

This table captures key figures from the bulletin that highlight Tanzania’s economic development in Q3 2024/25, focusing on investment, job creation, and sectoral contributions. Figures contribute to economic development:

• Capital Inflow (USD 2,164.7 million, 46.72% increase): Reflects strong investor confidence, driven by agriculture, energy, infrastructure, services, and manufacturing. This supports economic growth by increasing available capital for development projects.
• Projects and Jobs (199 projects, 24,444 jobs): The high number of projects and jobs boosts employment, household incomes, and tax revenues, fostering inclusive growth.
• Sectoral Growth: Manufacturing’s 45.87% capital increase and projects like the EACLC (USD 200 million+) and Kibaha Textile SEZ (USD 78.85 million) drive industrial and trade diversification.
• Agricultural Investments: Projects like Bugwema (USD 14.89 million) and Mkulazi (USD 570 million) modernize agriculture, enhancing food security and exports.
• Regional Balance: The distribution of projects across Dar es Salaam, Pwani, and Arusha promotes equitable economic development.
• 2024 Achievements: The record 901 projects and 212,293 jobs highlight a landmark year, driven by reforms like the Investment Act 2022 and the National Investment Campaign.

Momentum for Growth Amid Stability

Tanzania enters 2025/2026 with strong economic momentum, driven by projected GDP growth of 6.1% in 2025 and 6.4% in 2026, marking steady progress from 5.9% in 2024. Inflation remains contained at 3.2%–3.5%, ensuring price stability for consumers and businesses. Dynamic sectors such as ICT (13.5% growth by 2026), energy (12.0%), and mining (9.3%) are fueling economic transformation, while private sector credit is expanding robustly at over 20% annually. With public debt stabilized at around 46.5% of GDP and strong revenue performance (100%+ of targets), Tanzania is well-positioned for inclusive growth and investment expansion in key industries.

Tanzania Business Report 2025: Growth, Stability & Sectoral Transformation

Tanzania's economy in 2025 is poised on solid footing, building on the steady momentum of previous years. With consistent policy direction and resilience across sectors, the country presents a compelling picture for investors, analysts, and business stakeholders.

Macroeconomic Highlights (2020–2024)

• Real GDP Growth climbed from 4.5% in 2020 to 5.9% in 2024, indicating a gradual post-pandemic recovery and strong domestic activity.
• Headline Inflation remained moderate, ending 2024 at 3.0%, reinforcing price stability.
• The Exchange Rate (TZS/USD) depreciated slightly from 2,323 (2022) to 2,585 by Dec 2024, reflecting manageable currency pressures.
• Public Debt rose to ~46.3% of GDP in nominal terms but remains sustainable with a PV (Present Value) ratio of 41.1%.

Sectoral Performance (Growth %)

Top Performers: ICT, Energy, and Mining sectors drove 2024 growth, with ICT growing at a remarkable 12.5% and Energy at 11.0%, bolstered by digital transformation and energy infrastructure investments.

Trade Dynamics

• Exports of Goods & Services rebounded strongly in 2023 (+39.0%) but contracted -1.5% in 2024.
• Imports continued a positive trend, expanding by 6.4% in 2024, suggesting increased domestic demand.

Banking & Credit Sector

• Commercial Bank Deposits rose 15.6%, indicating confidence in the financial system.
• Lending Growth improved to 15.4%, with Private Sector Credit jumping 21.2%, reflecting a pro-business credit environment.

Government Fiscal Operations

Strong revenue collection (99.5% of target) and controlled deficit spending reflect fiscal discipline amid rising development investment.

Inflation Breakdown

The inflation structure indicates broad price stability, particularly in essential sectors.

Outlook

Tanzania heads into 2025 with strong momentum in ICT, energy, and industrial growth. Stable inflation, a healthy banking sector, and expanding infrastructure projects offer a conducive environment for private investment and business expansion.

📊 “Tanzania continues to set the pace in East Africa for diversified, resilient economic growth.”

Forecast for Tanzania for the year 2025/2026: Macroeconomic indicators, sectoral performance, trade, banking, fiscal operations, and inflation.

Macroeconomic Forecast: Tanzania (2025–2026)

Sectoral Growth Forecast (% Change)

Trade Forecast (% Change)

Banking & Credit Forecast (% Growth)

Government Fiscal Operations (% Change)

Inflation Breakdown (% Change)

Stability, Growth & Sectoral Momentum

Tanzania is heading into 2025/2026 with strong and balanced growth, supported by moderate inflation, stable fiscal management, and dynamic performance across key economic sectors.

Macroeconomic Outlook

• GDP growth is projected to accelerate to 6.1% in 2025 and 6.4% in 2026, indicating a robust economic recovery driven by infrastructure investments, digital economy growth, and regional trade.
• Inflation remains under control (around 3.2%–3.5%), which supports consumer purchasing power and business planning.
• The exchange rate will depreciate slowly, suggesting external stability but continued pressure from imports and global currency trends.
• Public debt remains sustainable, with only slight increases, showing effective debt management and continued investor confidence.

Sectoral Trends

• Top performing sectors will be:
  • ICT & Digital Economy: Growth will hit 13.5% in 2026, fueled by digital infrastructure, mobile usage, and e-services.
  • Energy Sector: Rapid growth (12% by 2026) shows Tanzania’s push in electricity and gas infrastructure.
  • Mining and Manufacturing: Ongoing reforms and mineral demand will sustain strong growth above 9% and 5.9% respectively.
• Agriculture, though steady, is growing slower — indicating the need for modernization and value chain development.
• Tourism is on the rebound, projected to reach 7% growth, reflecting increased travel and hospitality recovery.

Trade Dynamics

• Exports are projected to recover strongly (+6.0% in 2025 and +8.5% in 2026) after the 2024 dip — thanks to minerals, agriculture, and tourism.
• Imports will continue rising moderately, reflecting strong domestic demand for capital goods, industrial inputs, and consumer goods.

Financial Sector Confidence

• Commercial bank deposits and lending remain strong, growing above 14% annually, showing business confidence and expanding access to finance.
• Private sector credit growth above 20% indicates strong investment appetite and supportive banking environment.

Fiscal Responsibility

• The government will maintain a manageable budget deficit (~2% of GDP) while increasing both revenue and development spending.
• Grants are declining (only ~1% of revenue by 2026), signaling greater self-reliance in public finances.

Cost of Living

• Inflation is mild across food, housing, and transport — a positive sign for households and business cost planning.

Bottom Line

Tanzania in 2025/2026 is set for strong, inclusive, and sustainable growth, with opportunities in:

• Digital economy
• Energy infrastructure
• Export diversification
• Tourism revival
• Financial sector expansion