Activities across zones

In the fiscal year 2023/24, Tanzania's trade landscape, particularly in cross-border activities, displayed notable shifts across various regions. The overall trade surplus with neighboring countries decreased by 23.1%, settling at TZS 4,484.3 billion, driven by reduced exports in key sectors such as minerals and agricultural products, along with rising imports of manufactured goods. The Lake Zone emerged as the largest contributor to exports, totaling TZS 4,699.7 billion but marking a decline of 6.6% from the previous year, while the Southern Highlands saw a significant growth in agricultural exports, increasing by 17.4% to TZS 4,393.7 billion. Conversely, the Northern Zone faced a trade deficit of TZS 466.9 billion due to surging imports, highlighting a growing dependency on external goods. These dynamics underscore both the challenges and opportunities in Tanzania’s trade framework, emphasizing the need for policy interventions to bolster local production and enhance competitiveness in global markets.

1. Cross-Border Trade Surplus:
   • The overall trade surplus with neighboring countries narrowed by 23.1%, totaling TZS 4,484.3 billion. This decline was due to reduced exports, notably in minerals, fertilizers, live cattle, fish, and other consumables, coupled with increased imports of manufactured goods​.
2. Exports by Zone:
   • Lake Zone:
     • Export value: TZS 4,699.7 billion, a decrease of 6.6% from the previous year.
     • Lake Zone still accounted for the largest share of exports at 44.6% of total cross-border exports.
   • Southern Highlands:
     • Export value: TZS 4,393.7 billion, an increase of 17.4% year-over-year, reflecting growth in agricultural exports.
   • Northern Zone:
     • Export value: TZS 1,355.1 billion, showing a decrease of 7.2% from the prior year.
   • South Eastern Zone:
     • Export value was much smaller at TZS 96.8 billion, yet it marked a significant increase, suggesting emerging trade activities in this region​.
3. Imports by Zone:
   • Lake Zone: Recorded TZS 1,037.3 billion in imports, a slight decrease of 0.4%, accounting for 17.1% of the total import share.
   • Southern Highlands: Imported goods valued at TZS 3,200.4 billion, an increase of 55.5%, accounting for 52.8% of the total imports, driven mainly by manufactured goods.
   • Northern Zone: Imports rose to TZS 1,822.1 billion, a 38.2% increase, reflecting higher demand for goods like plastics, machinery, pharmaceuticals, and chemicals​(2024110115114536).
4. Trade Balance by Zone:
   • Lake Zone: Despite a reduction, it maintained a strong trade surplus of TZS 3,662.4 billion.
   • Southern Highlands: Had a surplus of TZS 1,193.3 billion, though it decreased by 29.1% compared to the previous year.
   • Northern Zone: Notably recorded a trade deficit of TZS 466.9 billion due to higher imports of manufactured goods.
   • South Eastern Zone: Saw a positive trade balance of TZS 95.5 billion, benefiting from growth in exports​.

Tanzania’s fiscal year 2023/24 provides insights into regional economic trends, challenges, and opportunities:

1. Strong Export Dependency on Agriculture:
   • Regions like the Lake Zone and Southern Highlands have robust exports, largely driven by agriculture, which accounted for significant shares of the country’s exports. This reliance on agricultural exports shows the importance of the agricultural sector to Tanzania’s trade balance but also highlights vulnerability to fluctuations in global demand or agricultural productivity.
2. Increasing Import Dependency:
   • The narrowing trade surplus and growth in imports, particularly in the Northern Zone, indicate rising domestic demand for manufactured goods like machinery, chemicals, and pharmaceuticals. This trend suggests that as Tanzania’s economy grows, there is an increasing need for imported industrial and consumer goods, possibly due to limited domestic production capacity for these items.
3. Regional Trade Imbalances:
   • The Lake Zone and Southern Highlands maintain trade surpluses, indicating these areas are economic strongholds in export production. In contrast, the Northern Zone recorded a trade deficit, driven by higher import needs. This imbalance points to a need for economic diversification in regions with trade deficits, as well as opportunities to boost local production to meet domestic demand and reduce import reliance.
4. Emerging Trade Activity in South Eastern Zone:
   • The growth in exports and trade balance in the South Eastern Zone, although from a smaller base, suggests that this region is starting to gain traction in cross-border trade. This growth could reflect improvements in infrastructure or strategic efforts to diversify Tanzania’s export portfolio.
5. Challenges with Export Competitiveness:
   • The overall reduction in exports, particularly in minerals and other commodities, indicates potential challenges in maintaining competitiveness or meeting international demand. This decrease could signal the need for investment in value-added processing to make Tanzania’s exports more competitive globally, beyond raw materials and basic agricultural products.
6. Trade as an Economic Indicator:
   • The trade patterns reflect broader economic dynamics, such as the growth in consumption and industrial needs across regions, increased reliance on imports, and the potential for further industrialization. The demand for imports underscores Tanzania’s growing economy, while the dependency on specific zones for export revenue highlights areas for policy focus, such as regional economic development, infrastructure, and manufacturing incentives.

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: