Comprehensive Economic Analysis & Investment Guide
Tanzania enters 2026 with strong macroeconomic fundamentals, characterized by robust GDP growth accelerating from 5.5% in 2024 to approximately 6.0% in 2025, projected to reach 6.3% in 2026. The economy is expected to expand to approximately USD 87 billion, with GDP per capita rising toward USD 1,300.
| Indicator | 2024 | 2025 | 2026 (Proj.) | Trend |
|---|---|---|---|---|
| Real GDP Growth (%) | 5.5% | 6.0% | 6.3% | Accelerating |
| GDP Value (USD billion) | $78.8 | ~$82 | ~$87 | Growing |
| GDP per Capita (USD) | $1,200 | ~$1,250 | ~$1,300 | Rising |
| Inflation (%) | 3.1% | 3.3% | 3.5% | Controlled |
| Metric | 2024 | 2025 | 2026 (Proj.) | Status |
|---|---|---|---|---|
| Debt-to-GDP Ratio (%) | 47.3% | 46.8% | 45.0% | Declining |
| Fiscal Deficit (% of GDP) | 2.5% | 2.5% | 2.5% | Under Control |
| Tax Revenue (% of GDP) | 13.1% | 13.1% | 13.5% | Improving |
| FX Reserves (USD billion) | $6.3 | $6.3+ | $6.5+ | Adequate |
Assessment: Tanzania maintains a "moderate risk" debt distress classification by the IMF. The present value of public debt declined from 41.1% (2023/24) to 40.6% (2024/25), on a positive trajectory toward 39.5% by 2026/27. Fiscal discipline is improving with the deficit narrowing to 2.5%, well within the EAC convergence criterion of 3% of GDP.
| Sector | GDP Share (%) | Growth Rate 2024 (%) | Employment Share (%) | Performance |
|---|---|---|---|---|
| Services | 42-44% | 5.2-15.4% | 29% | Strong |
| Industry | 30-31% | 6.5-8.6% | 6.8% | Growing |
| Agriculture | 25-27% | 3.0-5.0% | 65% | Moderate |
Achievement: Tanzania was named "Africa's Leading Destination" at the World Travel Awards 2025. The sector experienced a remarkable 132% increase in international arrivals from 2021-2024, with the Serengeti recognized as the best safari destination globally for six consecutive years (2019-2024).
| Indicator | 2024 | Performance |
|---|---|---|
| GDP Contribution | 10.1% | Growing |
| Sector Growth Rate | 8.6% | Strong |
| Gold Production | 60,000 kg | All-time high |
| Mineral Export Value | ~$4.5 billion | Record |
| Gold Share of Total Exports | 52% | Dominant |
| Direct Employment | 310,000+ | Expanding |
Critical Minerals Opportunity: Tanzania holds significant untapped reserves of nickel (Kabanga deposit - one of world's largest), graphite (Lindi Jumbo project for EV batteries), lithium, cobalt, and rare earth elements. Natural gas reserves exceed 55 trillion cubic feet, with the Likong'o-Mchinga LNG project planned at $30 billion investment.
While agriculture employs 65% of the workforce (~20 million workers), it contributes only 26% of GDP, highlighting persistent low productivity issues. Cereal yields are at only 40% of world average, and only 1.5% of suitable cropland is irrigated (95% rain-fed), making the sector highly vulnerable to climate change.
Growth Areas:
Manufacturing has remained stagnant at ~8% of GDP since the mid-1990s—a critical constraint on Tanzania's structural transformation. Export orientation is particularly weak, with manufacturing contributing less than 25% of total exports. This limits job creation and industrial diversification despite the sector employing approximately 7% of the workforce.
| Year | FDI Inflows (USD) | Growth Rate | % of GDP | Regional Rank |
|---|---|---|---|---|
| 2022 | $1.26 billion | +6.2% | - | - |
| 2023 | $1.34-1.60 billion | +5.9-13.2% | 2.06% | #11 Africa |
| 2024 | $1.72 billion | +28.3% | 2.2% | #11 Africa |
| 2025 (Target) | $15 billion | - | - | Ambitious |
Regional Leadership: Tanzania recorded the fastest FDI growth rate in East Africa at 28.3%, exceeding the regional average of 12% and continental average. This positions Tanzania among Africa's top performers in attracting foreign investment.
| Rank | Country | Investment (USD) | Share (%) |
|---|---|---|---|
| 1 | 🇦🇪 United Arab Emirates | $502.02 million | 31.0% |
| 2 | 🇨🇳 China | $438.41 million | 27.1% |
| 3 | 🇮🇳 India | $176.18 million | 10.9% |
| 4 | 🇸🇬 Singapore | $139.50 million | 8.6% |
| 5 | 🇫🇷 France | $102.00 million | 6.3% |
| Sector | Projects | Capital (USD) | Focus Areas |
|---|---|---|---|
| Manufacturing | 377 | $3.1 billion | Agro-processing, textiles, consumer goods |
| Transport | 138 | $1.2 billion | Infrastructure, logistics |
| Commercial Buildings | 91 | $706 million | Real estate, offices |
| Agriculture | 66 | $599 million | Value addition, mechanization |
| Tourism | 76 | $337 million | Hotels, eco-lodges |
| Energy | - | $373 million | Gas, renewables (+546% QoQ) |
Five Major SEZs Launched (August 2025):
| Country | 2020 Rank (out of 190) | Score (0-100) | Regional Position |
|---|---|---|---|
| Rwanda | 38 | 76.5 | #1 in EAC |
| Kenya | 56 | 73.2 | #2 in EAC |
| Uganda | 116 | 60.0 | #3 in EAC |
| Tanzania | 141 | 54.5 | #4 in EAC |
Note: World Bank discontinued Doing Business rankings in 2020. Tanzania has implemented MKUMBI I (2018-2023) and MKUMBI II (2023+) regulatory reform blueprints to improve the business climate.
| Country | Rank (out of 180) | Score (0-100) | Trend | Context |
|---|---|---|---|---|
| Rwanda | 57 | 57 | Best in EAC | Regional leader |
| Tanzania | 82 | 41 | +1 from 2023 | Above SSA avg (33) |
| Uganda | 114 | 26 | Below average | - |
| Kenya | 123 | ~30-35 | Below average | - |
Significant Progress: Tanzania has achieved an 86% improvement since 2001 (score rising from 22 to 41), making it one of only 5 African countries with substantial corruption reduction over the past decade. The country now ranks above the Sub-Saharan Africa average of 33.
| Risk Category | Severity | Trend | Key Issues |
|---|---|---|---|
| Climate Change Impacts | HIGH | Worsening | Agriculture vulnerability, droughts, floods |
| Infrastructure Deficits | HIGH | Improving slowly | Electricity access (<50% population), transport gaps |
| Skills Shortage | HIGH | Worsening | 90% TVET teacher gap, tech skills deficit |
| Export Dependence | HIGH | Stable | Gold = 52% of exports |
| Current Account Deficit | MODERATE | Widening | 4% of GDP, import dependence |
| Debt Sustainability | MODERATE | Improving | 46.8% debt-to-GDP, declining trajectory |
| Metric | Current Status (2024-2025) | 2030 Goal | Gap |
|---|---|---|---|
| Overall Access (Mainland) | 78.4% | 100% | 21.6% |
| Population Coverage | <50% | 75% | 25%+ |
| Urban Access | 99.6% | 100% | 0.4% |
| Rural Access | 69.6% | 100% | 30.4% |
| Hamlets with Access | 28,659/64,760 | 64,760 | 36,101 hamlets |
| Investment Needed | - | $12.9 billion | TZS 6.7T for hamlets |
| Annual Connections Required | 562,940 (achieved 2024) | 1.6 million/year | 2.8x increase needed |
Critical Gap: Despite 99.1% of villages being electrified, less than 50% of the mainland population is actually connected. This represents a massive last-mile challenge requiring TZS 6.7 trillion investment and tripling current connection rates.
| Indicator | Demand | Supply | Gap |
|---|---|---|---|
| TVET Teachers Needed | 620 | 62 available | 558 shortage (90%) |
| Total Teachers (Next Few Years) | 72,400 | Current workforce | Massive shortage |
| Tech Employment (2025 Proj.) | 215,000 | 35,000 (2019) | +614% growth needed |
| Healthcare Workers Ratio | 1:1,000 (WHO) | 1:1,982 | Nearly half of target |
Tanzania ranks 145th out of 187 in climate readiness. Key impacts include:
| Country | GDP (USD billion) | Population (M) | Growth Rate 2025 | FDI Growth 2024 |
|---|---|---|---|---|
| Kenya | $131.67 | ~55 | 5.3% | Flat (0%) |
| Ethiopia | $117.46-205 | ~126 | 7.2% | +21.9% |
| Tanzania | $73-87 | ~65 | 6.0% | +28.3% ✓ |
| Uganda | $56.31 | ~48 | 6.0% | +10.4% |
| Rwanda | $13.7 | ~14 | 7.2% | +14.4% |
| Metric | 2026 | 2027 | 2028 | 2029 | 2030 | CAGR |
|---|---|---|---|---|---|---|
| Real GDP Growth (%) | 6.3 | 6.5 | 6.7 | 6.8 | 7.0 | 6.7% |
| GDP Value (USD billion) | ~$87 | ~$93 | ~$99 | ~$106 | ~$113 | 6.8% |
| GDP per Capita (USD) | ~$1,300 | ~$1,360 | ~$1,420 | ~$1,485 | ~$1,550 | 4.5% |
| Sector | Investment Potential | Key Projects | ROI Drivers |
|---|---|---|---|
| Energy | $15B+ | Gas-to-power, renewables, transmission | Universal access demand, industrial growth |
| Infrastructure | $12B+ | SGR completion, ports, roads, airports | Regional trade hub, landlocked neighbors |
| Mining | $10B+ | Nickel, graphite, LNG, gold expansion | Critical minerals boom, EV supply chain |
| Manufacturing | $8B+ | SEZ development, agro-processing | Import substitution, export markets |
| Tourism | $5B+ | Hotels, eco-lodges, attractions | 8M visitor target, premium positioning |
| Agriculture | $4B+ | Irrigation, mechanization, value addition | Food security, export growth |
The 2026-2030 period establishes the structural foundations for Tanzania's Vision 2050 goal of becoming a middle-income country with a $1 trillion economy. By 2030, Tanzania aims to reach $113 billion GDP (~11% of 2050 goal), positioning the country firmly on the path to high-income status.
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By Dr. Bravious Kahyoza, PhD, Senior Economist at TICGL and Dr. Jasinta Msamula, PhD. Lecturer Mzumbe University.
Public-Private Partnerships (PPPs) could be Tanzania’s key ingredient for sustained economic development—if implemented effectively. Lessons from successful global models provide a roadmap for strengthening infrastructure, mobilizing private investment, and unlocking Tanzania’s full economic potential.
Tanzania’s economic growth remains hindered by infrastructure gaps in critical sectors such as transportation, energy, water, and sanitation.
Addressing these problems is urgent if the country wants to grow in the long term. PPPs can help by using private money, skills, and sharing risks between the government and investors.
The World Bank’s 2023 Private Participation in Infrastructure (PPI) report says private companies invested over $100 billion in infrastructure. This money went into 322 projects in 68 countries. Although this is a bit less than in 2022, it shows investors trust markets with good rules and clear leadership.
Global Lessons for Tanzania
Around the world, strategic PPPs have transformed economies, enhanced infrastructure, and boosted fiscal stability. From China’s renewable energy boom to Peru’s modernized ports, the results speak for themselves. If Tanzania can adopt the right policies, it too can attract investment, generate employment, and increase global competitiveness.
Europe and Central Asia: Transparent Procurement Drives Growth
Countries in Europe and Central Asia have successfully attracted PPP investments by ensuring transparent procurement and regulatory clarity. A notable example is Uzbekistan’s $400 million Andijan Solar PV Plant, which secured significant private sector involvement and paved the way for renewable energy advancements. Similarly, Bulgaria’s solid waste management projects have demonstrated how PPPs can enhance urban services while reducing the government’s financial burden.
East Asia and the Pacific: Trade and Energy Efficiency
In East Asia and the Pacific, large-scale PPPs have been game-changers for trade and infrastructure. In 2023, China and the Philippines secured $51.4 billion in private infrastructure investments, primarily in railway projects that reduced transportation costs and boosted export competitiveness—two areas where Tanzania urgently needs improvement. China’s renewable energy investments further demonstrate how infrastructure and sustainability can go hand in hand, while the Philippines’ diversified PPP investments in energy, logistics, and ICT present a model for Tanzania to follow.
Latin America: Ports and Roads as Economic Catalysts
Latin America’s experience highlights how modernized ports and efficient road networks can drive economic transformation. Peru’s $975 million Chancay Multipurpose Port Terminal improved logistics, increased trade, and attracted global supply chain investments—proving that infrastructure investment yields tangible economic benefits. Brazil’s concession-based road infrastructure projects reduced logistics costs by 20%, improving supply chain efficiency—an approach Tanzania could replicate to enhance transportation networks and reduce operational costs.
Middle East and North Africa: Infrastructure for Resilience
The Middle East and North Africa (MENA) region offers insights into building resilience through infrastructure diversification. Egypt’s $2.3 billion Ain Sokhna Port expansion significantly boosted trade and regional competitiveness. Meanwhile, Tunisia’s $220 million investment in sanitation infrastructure greatly improved urban health and resilience—areas that are increasingly relevant for rapidly growing Tanzanian cities.
South Asia: The Power of Policy Reforms
India’s $7 billion in highway PPP concessions proves that policy consistency, investor confidence, and open procurement systems are essential in attracting long-term investment. If Tanzania implements similar policy reforms, it could unlock substantial funding for transport, energy, and digital infrastructure.
Sub-Saharan Africa: Emerging Success Stories
PPPs are already making an impact in Africa. Senegal’s $316 million investment in modernized transportation has strengthened logistics networks, while South Africa’s $1 billion port and logistics upgrades have significantly boosted trade efficiency. Tanzania is also making strides, with ongoing investments in transport, energy, and logistics attracting growing attention. However, the time is ripe for Tanzania to expand PPPs into emerging sectors like ICT and renewable energy, where global trends indicate strong investment potential.
The Road Ahead for Tanzania
Tanzania’s infrastructure development strategy must embrace global best practices in PPP structuring, policy transparency, and investment incentives. By doing so, the country can attract high-quality investments, enhance economic competitiveness, and drive long-term growth. While the challenges are substantial, so are the opportunities. With strategic planning and commitment to reform, Tanzania can transform its infrastructure landscape and unlock a new era of economic development.
What Does Tanzania Need to Do?
Tanzania’s path forward is clear—addressing structural challenges is essential to unlocking the full potential of Public-Private Partnerships (PPPs). Bureaucratic inefficiencies and legal uncertainties continue to delay projects and shake investor confidence. One critical step is the establishment of a centralized PPP unit under the Ministry of Finance. Such a unit would streamline processes, ensure accountability, enhance expertise, and provide consistent oversight, making Tanzania’s PPP framework more attractive to investors.
Strengthening Financing Mechanisms
Financing is central to successful Public-Private Partnerships (PPPs). The World Bank’s PPI Report shows 67% of global PPP funding comes from private capital, 13% from public funds, and 20% from Development Finance Institutions (DFIs).
DFIs help de-risk projects through concessional loans, guarantees, and equity.
Tanzania should embrace blended finance, which combines concessional and commercial funds, to attract private investment.
Effective PPP models include Brazil’s Build-Operate-Transfer (BOT), the Design-Build-Finance-Operate (DBFO) model, and Peru’s concession agreements, all of which balance infrastructure development with public service delivery.
Tapping into Local Capital Markets
Local capital markets remain an underutilized resource for infrastructure financing in Tanzania. South Africa’s success in mobilizing domestic infrastructure debt provides a strong example. Encouraging pension funds, banks, and institutional investors to finance large-scale projects could significantly enhance funding availability while reducing reliance on foreign capital.
In addition, transparent procurement systems are vital. Competitive bidding processes not only ensure value for money but also help curb corruption, which is critical for building long-term trust with investors.
Diversifying PPP Investments Beyond Transportation
Tanzania must look beyond roads and ports to diversify its PPP portfolio. Expanding into ICT, water, sanitation, renewable energy, and industrial parks will broaden economic opportunities and address pressing national priorities. Projects that provide both social and economic benefits should be at the top of Tanzania’s PPP agenda.
Inspiration for Bold Action
Egypt’s Ain Sokhna Port expansion and South Africa’s renewable energy program show that bold choices can lead to big changes.
Tanzania should not be left behind. By supporting a wider range of projects, improving governance, and building stronger institutions, the country can attract more investment to improve its infrastructure.
The solutions are possible as Tanzania can create a strong Public-Private Partnership (PPP) unit, use open and fair procurement systems, and train local professionals, helping the country manage complex PPP projects better.
Important areas like water sanitation, industrial parks, and transport hubs should be given priority to help grow the economy.
Tanzania must not miss this chance as other regions—such as East Asia, Latin America, and Sub-Saharan Africa—show that PPP success comes from clear planning, strong institutions, and stable policies.
This is the right moment for serious reforms and smart investments.
With honest leadership, creative financing, and fair development, Tanzania can become a leader in building infrastructure.
PPPs can bring jobs, raise productivity, and improve lives. But to make this happen, Tanzania must take action—not just talk.
In December 2024, Tanzania’s external sector showed resilience, with total exports rising by 9.8% to USD 14.72 billion, driven by gold (USD 3.49 billion, +4.3%) and tourism (USD 3.10 billion, +15.1%). Meanwhile, total imports increased by 7.2% to USD 17.85 billion, with petroleum imports (USD 4.08 billion, +10.2%) remaining the largest contributor to trade costs. As a result, the trade deficit narrowed to USD 3.13 billion, improving Tanzania’s external position. Foreign reserves stood at USD 5.5 billion, covering 4.5 months of imports, ensuring currency stability. To sustain this progress, Tanzania must diversify exports, attract more FDI (USD 1.83 billion, +8.2%), and reduce reliance on imported petroleum
Tanzania’s external sector performance in December 2024 reflected strong export growth, increased foreign exchange inflows, and a narrowing trade deficit, supported by higher commodity prices and improved tourism earnings. However, import growth and external debt obligations remained key challenges.
1. Balance of Payments (BoP) and Foreign Reserves
Implication:
✅ Higher reserves provide a cushion against external shocks and currency depreciation.
⚠️ A persistent BoP deficit means Tanzania still relies on external borrowing and capital inflows to maintain reserves.
2. Exports Performance
Tanzania’s total exports of goods and services increased by 9.8% to USD 14.72 billion in the year ending December 2024, compared to USD 13.41 billion in December 2023.
Key Export Categories
| Export Category | Value (USD Billion) | Annual Growth (%) |
| Gold | 3.49 | +4.3% |
| Tourism Receipts | 3.10 | +15.1% |
| Manufactured Goods | 1.92 | +8.7% |
| Cashew Nuts | 0.98 | +12.5% |
| Tobacco | 0.79 | +11.4% |
| Horticulture (Fruits & Vegetables) | 0.51 | +13.6% |
| Other Exports | 3.93 | +6.9% |
| Total Exports | 14.72 | +9.8% |
Key Observations:
✅ Tourism earnings (USD 3.10 billion, up 15.1%) indicate a full post-pandemic recovery, supported by increased international arrivals.
✅ Gold remains Tanzania’s top export (USD 3.49 billion, 23.7% of total exports), benefiting from strong global prices.
⚠️ The export base is still concentrated in commodities, increasing vulnerability to price fluctuations.
3. Imports Performance
Key Import Categories
| Import Category | Value (USD Billion) | Annual Growth (%) |
| Petroleum Products | 4.08 | +10.2% |
| Machinery & Equipment | 2.81 | +9.5% |
| Industrial Raw Materials | 2.45 | +6.8% |
| Consumer Goods | 2.17 | +4.2% |
| Transport Equipment | 1.92 | +5.3% |
| Wheat & Edible Oils | 1.14 | +8.7% |
| Other Imports | 3.28 | +5.1% |
| Total Imports | 17.85 | +7.2% |
Key Observations:
✅ Increased imports of machinery (USD 2.81 billion, +9.5%) and raw materials (USD 2.45 billion, +6.8%) suggest industrial expansion.
⚠️ High petroleum import costs (USD 4.08 billion, +10.2%) increase trade deficit risks, making energy diversification crucial.
4. Trade Balance and Current Account Deficit
Implication:
✅ Narrowing deficits indicate improved external stability, reducing pressure on foreign reserves.
⚠️ The trade deficit remains large, requiring further efforts to boost export diversification.
5. Foreign Direct Investment (FDI) and Capital Flows
Implication:
✅ Higher FDI supports long-term economic growth, while increased remittances help stabilize the current account.
⚠️ Reliance on capital inflows means external shocks (e.g., global interest rate changes) could impact Tanzania’s financial position.
Key Takeaways:
📌 Exports grew by 9.8% (USD 14.72 billion), led by gold (USD 3.49 billion) and tourism (USD 3.10 billion), reducing the trade deficit.
📌 Imports increased by 7.2% (USD 17.85 billion), mainly in petroleum (USD 4.08 billion) and machinery (USD 2.81 billion), reflecting industrial growth.
📌 Foreign reserves remain strong at USD 5.5 billion (4.5 months of imports), supporting exchange rate stability.
📌 FDI inflows (USD 1.83 billion) and remittances (USD 589.2 million) improved, enhancing external financial stability.
To further strengthen external sector resilience, Tanzania should expand non-traditional exports, attract more FDI, and promote energy diversification to reduce petroleum import costs
1. Tanzania’s Export Growth is Strong, But Still Reliant on Commodities
Implication:
✅ Strong export growth helped narrow the trade deficit, reducing external vulnerabilities.
⚠️ The export base is still commodity-driven (gold, cashew nuts, tobacco), making Tanzania vulnerable to price fluctuations.
🔹 Tanzania must diversify its exports beyond raw commodities by increasing value addition (e.g., processed agricultural goods and finished manufactured products).
2. Imports Growth Reflects Economic Expansion, But High Energy Costs Are a Concern
Implication:
✅ Higher imports of machinery and industrial inputs suggest economic expansion and manufacturing growth.
⚠️ Heavy dependence on petroleum imports increases trade deficit risks, highlighting the need for energy diversification (e.g., renewable energy investment).
3. Trade Deficit is Narrowing, Improving Tanzania’s External Position
Implication:
✅ The narrowing trade and current account deficits indicate improved economic resilience and reduced pressure on foreign reserves.
⚠️ Tanzania must continue promoting exports and attracting FDI to sustain this positive trend.
4. Foreign Exchange Reserves Remain Stable, Supporting Currency Stability
Implication:
✅ Adequate reserves ensure Tanzania can manage external shocks (e.g., exchange rate volatility, rising global interest rates).
⚠️ Sustaining reserve levels requires continued export growth and careful debt management.
5. Increased FDI and Capital Inflows Boost External Stability
Implication:
✅ FDI growth supports economic expansion and job creation, while rising remittances strengthen household incomes.
⚠️ Tanzania must continue improving its investment climate to attract long-term capital flows.
Key Takeaways and Policy Actions Needed
📌 Exports grew by 9.8%, narrowing the trade deficit, but reliance on commodities remains a risk.
📌 Imports rose by 7.2%, mainly in petroleum and machinery, supporting industrial expansion but increasing energy dependence.
📌 Foreign reserves remain strong at USD 5.5 billion (4.5 months of import cover), stabilizing exchange rate risks.
📌 FDI and remittances increased, strengthening Tanzania’s external financial position.
🔹 What Needs to Be Done?
✅ Diversify export products and markets to reduce commodity reliance.
✅ Expand energy investments to reduce petroleum import costs.
✅ Strengthen policies to attract FDI in manufacturing, agribusiness, and technology.
✅ Boost domestic industries to reduce import dependence.
Overall, Tanzania’s external sector performance in December 2024 shows resilience, but efforts to strengthen export diversification and reduce reliance on external borrowing are crucial for long-term stability
A Legacy of Collaboration and a Blueprint for the Future
By Dr. Bravious Kahyoza, PhD, Senior Economist at TICGL
Tanzania’s journey with Public-Private Partnerships (PPPs) is a compelling narrative of ambition, resilience, and progress. From visionary reforms to groundbreaking collaborations, the country has redefined how public and private sectors can unite to tackle critical challenges. At its core, this is a story of transformation, driven by innovation and a steadfast belief in the power of partnership to uplift a nation.
The Foundations of PPPs in Tanzania
The foundation for PPPs in Tanzania was laid during the administration of President Benjamin Mkapa, whose foresight underscored the importance of liberalization in achieving sustainable economic growth. Under his leadership, Tanzania embraced reforms that positioned the private sector as an engine of development. Mkapa’s vision was clear: the private sector is not a competitor but a development partner. This belief set the stage for deeper collaborations between the government and private entities in providing critical public services and infrastructure.
Building on this foundation, the government under Prime Minister Mizengo Pinda took decisive steps to institutionalize the PPP framework. In 2010, the Public-Private Partnership Act, Cap. 103 was enacted, establishing the PPP Coordination Unit and the PPP Finance Unit to analyze projects for technical and financial viability, respectively. Pinda championed the legislation, emphasizing the need for a structured system where the government and private sector could collaborate efficiently. However, implementation challenges soon became evident, necessitating further reforms.
Evolution and Reforms of the PPP Framework
By 2014, the government acknowledged these challenges and moved to amend the PPP Act, merging the two units into the PPP Centre, a centralized entity within the Office of the Prime Minister. This reform aimed to streamline decision-making processes and reduce bureaucratic hurdles. Economic experts like Prof. Lucian Msambichaka from the University of Dar es Salaam supported the change, noting that a fragmented approach could not thrive in a fast-paced economic environment. A single institution, he argued, would instill confidence among investors and guide the process more effectively.
Another pivotal reform came in 2018, when the PPP Centre was relocated to the Ministry of Finance and Planning to align its operations more closely with the country’s fiscal policies. Leaders like Prof. Kitila Mkumbo, Minister of Planning and Investment, advocated for the move, believing that integration with the finance ministry would ensure more effective resource mobilization aligned with national priorities.
Current Leadership and Progress
Today, the PPP Centre operates under the Ministry of Finance and Planning, led by David Zacharia Kafulila, a seasoned public administrator appointed as the Centre’s first Executive Director in January 2024. Under his leadership, Tanzania’s PPP agenda has been revitalized, leading to the initiation and acceleration of projects in critical sectors such as energy, transportation, and health. With a results-driven approach, Kafulila emphasizes that partnerships must deliver real outcomes. His leadership has drawn praise from President Samia Suluhu Hassan, who, in a national address, recognized the Centre’s transformation into a model of efficiency and innovation. Projects once stalled are now progressing, instilling a renewed sense of hope for the future.
Challenges and the Road Ahead
Yet, despite the progress, challenges remain. The late Prof. Honest Ngowi from Mzumbe University often highlighted the barriers hindering the full realization of PPPs in Tanzania. These include gaps in the legal and institutional framework, a need for more comprehensive feasibility studies, and improved risk-sharing mechanisms to better attract private-sector investment. As he put it, goodwill alone is not enough—the government must foster an environment where investors feel secure and respected.
The impact of faith-based organizations in sectors such as education, health, and water demonstrates the transformative power of partnerships. Their successes offer proof of concept, yet scaling these models to large infrastructure projects has proven difficult due to complex regulatory and financial dynamics.
Tanzania’s PPP progress has been bolstered by broader economic reforms. Investment as a percentage of GDP increased from 17.6 percent in 1995 to 26.3 percent in 2008, and by 2023, it stood at 40.25 percent—reflecting greater private sector participation. However, access to credit remains low by global standards, limiting the scope of private involvement in high-impact projects. Prof. Ngowi often emphasized the need for expanded access to long-term financing to support truly transformative initiatives.
Foreign Direct Investment has also seen positive growth, rising by 14.7 percent in 2023 to reach $1.65 billion, up from $1.44 billion the year before. This increase was largely driven by a surge in intercompany loans, which accounted for 43.1 percent of total FDI flows, compared to 8.7 percent in 2022. While these figures are promising, they remain modest when compared to global and regional benchmarks. Addressing bottlenecks in infrastructure and refining the regulatory environment will be crucial to attracting even more investment. Prof. Mkumbo has often stressed that without a supportive business environment, Tanzania risks falling behind in the global competition for capital.
A Look at Regional Success Stories
Valuable lessons can be drawn from other African countries that have implemented successful PPP models. South Africa’s Renewable Energy Independent Power Producer Procurement (REIPPP) program has attracted billions in investment by offering clear guidelines, competitive bidding, and consistent government commitment. Kenya’s Nairobi Expressway is another success story, showcasing the value of strategic partnerships that balance investor returns with public benefits.
These examples underline a central truth: effective PPPs depend on transparent processes, strong institutions, and clear policy frameworks that inspire investor confidence while safeguarding public interest.
The Future of PPPs in Tanzania
As Tanzania moves toward realizing its Vision 2025 development agenda, the role of PPPs will only grow more critical. The government recognizes that bridging financial and technical resource gaps will require active participation from the private sector. Kafulila maintains that PPPs are not just a financing mechanism—they are a strategy for delivering better services and spurring economic growth. His balanced approach blends private-sector innovation with public oversight to ensure lasting benefits for all citizens.
The legacy of PPPs in Tanzania reflects decades of deliberate policy choices and courageous leadership—from President Mkapa’s economic liberalization to Prime Minister Pinda’s legal reforms and the insights of economists like Prof. Msambichaka and Prof. Ngowi. Today, that legacy is being shaped further by a new generation of leaders and partners.
With strong leadership, coherent policies, and a shared national vision, Tanzania is well-positioned to unlock the full potential of Public-Private Partnerships—building a future defined by inclusive development, modern infrastructure, and sustained prosperity.