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.

Key Figures:

• Total Projects: Increased from 207 (2020) to 901 (2024) — +335% growth.
• Domestic Projects: Increased from 64 (2020) to 321 (2024) — +402% growth.
• Foreign Projects: Increased from 81 (2020) to 404 (2024) — +399% growth.
• Joint Venture Projects: Increased from 62 (2020) to 176 (2024) — +184% growth.
• Capital Investment: Rose from $1.1 billion (2020) to $9.3 billion (2024) — +745% growth.
• Jobs Created: Rose from 17,385 (2020) to 212,293 (2024) — +1,121% growth.
• Top Investment Sectors by Capital (2024): Manufacturing ($2.19 billion), Agriculture ($1.89 billion), Commercial Buildings ($788.86 million).
• Top Sources of FDI (2024): China ($1.05 billion), Vietnam ($783.4 million), Mauritius ($773.96 million).
• Top Region by Investment (2024): Dar es Salaam with $4.44 billion across 356 projects and 107,962 jobs.

Project Registration Trends (2020-2024)

Project Ownership in 2024

• Foreign ownership: 44.8% (compared to 40.7% in 2023)
• Joint ventures: 19.6% (compared to 24.7% in 2023)
• Domestic ownership: 35.6% (compared to 34.6% in 2023)

Sectoral Analysis of Projects (January-December 2024)

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:

1. Commercial Building: approximately 125,760 jobs
2. Manufacturing: approximately 45,883 jobs
3. Economic Infrastructure: approximately 18,780 jobs
4. Transportation: approximately 7,475 jobs
5. Tourism: approximately 6,949 jobs

Capital Investment by Sector (January-December 2024)

Total investment: $9.3 billion Top sectors receiving investment:

1. Manufacturing: approximately $2.19 billion
2. Agriculture: approximately $1.89 billion
3. Commercial Building: approximately $788.86 million
4. Transportation: approximately $706.39 million
5. Telecommunication: approximately $651.92 million

Foreign Direct Investment (FDI)

Top 5 Sources of FDI in 2024

1. China: $1,053.46 million
2. Vietnam: $783.4 million
3. Mauritius: $773.96 million
4. UAE: $702.52 million
5. United Kingdom: $394.30 million

Top 5 Sources of FDI in 2023

1. China: $2,111.41 million
2. India: $190.53 million
3. Singapore: $143.29 million
4. Hong Kong: $135 million
5. Germany: $131.25 million

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).

Top 10 Regional Distribution (by Capital Investment)

1. Dar es Salaam: 356 projects, 107,962 jobs, $4,440.97 million capital
2. Pwani: 166 projects, 49,784 jobs, $1,243.87 million capital
3. Ruvuma: 11 projects, 5,735 jobs, $597.64 million capital
4. Mwanza: 37 projects, 4,395 jobs, $581.11 million capital
5. Morogoro: 22 projects, 11,556 jobs, $446.17 million capital
6. Shinyanga: 16 projects, 1,121 jobs, $415.21 million capital
7. Arusha: 64 projects, 6,657 jobs, $213.06 million capital
8. Dodoma: 47 projects, 6,540 jobs, $182.36 million capital
9. Kigoma: 8 projects, 774 jobs, $155.62 million capital
10. Tanga: 23 projects, 1,315 jobs, $137.66 million capital

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.

Trend Analysis of TIC Investment Projects (2020–2024):

1. Massive Growth in Investment Activity

• Project registrations rose 335% (from 207 to 901 projects).
• Strong surges in 2023 (+79%) and 2024 (+71%) especially indicate a sharp acceleration in interest.
• This suggests that Tanzania became a significantly more attractive investment destination over this period — possibly due to government reforms, better investment climate, infrastructure development, or global shifts.

2. Balanced Growth Between Domestic and Foreign Investments

• Domestic projects grew 402%, while foreign projects grew 399%.
• This shows that local investors are increasingly active, not just foreign investors — a positive signal of internal economic confidence and private sector development.

3. Joint Ventures Growing, But More Slowly

• Joint ventures increased 184%, slower compared to domestic and foreign projects.
• This may suggest a need to further encourage partnerships between Tanzanian and foreign investors.

4. Exceptional Job Creation

• Jobs created rose from 17,385 in 2020 to 212,293 in 2024 — a 1,121% increase.
• Shows investment projects are not just rising numerically, but also becoming larger and more labor-intensive, especially in sectors like commercial building and manufacturing.

5. Sharp Increase in Capital Investment

• Capital investment jumped from $1.1 billion to $9.3 billion (+745%).
• This signals larger-scale projects, and higher-value industries being targeted (not just quantity of projects but also quality/size).

6. Sectoral Insights

• Manufacturing is the top sector by project count and by capital investment ($2.19 billion).
• Commercial building dominates in job creation (125,760 jobs) but not necessarily in capital.
• Agriculture attracted the second-highest investment ($1.89 billion), reflecting efforts to modernize and commercialize the sector.
• Transportation and Telecommunications are emerging sectors — critical for logistics and digital economy growth.

7. Changes in Project Ownership Structure

• Foreign ownership increased slightly from 40.7% (2023) to 44.8% (2024).
• Domestic ownership also rose slightly, while joint ventures declined, suggesting investors may increasingly prefer to go solo rather than partner.

8. Foreign Direct Investment (FDI) Dynamics

• China remains the leading source of FDI in 2023 and 2024, though its FDI declined from $2.1 billion (2023) to $1.05 billion (2024).
• New strong entries in 2024 include Vietnam, Mauritius, and UAE — indicating diversification of Tanzania’s FDI sources.
• Shows shifting global investment patterns towards Tanzania.

9. Administrative Improvements

• A significant increase in permits, licenses, and approvals in 2024 suggests:
  • Greater activity and support from regulatory agencies.
  • Possibly better ease of doing business.
  • Tanzania’s institutions are responding to investment growth with better service delivery.

10. Regional Distribution

• Dar es Salaam and Pwani regions dominate in project number, job creation, and capital — but other regions like Ruvuma and Mwanza also attract significant investments.
• This suggests some beginning of investment decentralization, though still heavily urban/concentrated.

In Summary:

• Tanzania’s investment climate significantly improved from 2020–2024, characterized by:
  • Higher number, size, and diversity of projects.
  • Increased domestic investor participation.
  • Massive job creation.
  • Sectoral diversification.
  • Geographic spreading (still early but visible).
• Policy reforms, institutional strengthening, infrastructure improvements, and targeted promotion efforts likely played key roles.

Tanzania Investment Centre - Key Figures 2020-2024

Project Ownership Distribution (%)

Top 5 Sectors by Job Creation (2024)

Top 5 Sectors by Capital Investment (2024)

Top 5 Sources of FDI

Top 10 Regional Distribution (2024)

Macroeconomic Indicators (2024)

Tanzania has experienced a steady decline in foreign aid, with official development assistance (ODA) dropping from $761 million in 2013 to $389 million in 2024 and further projected to fall to $118 million in 2025. With ODA accounting for 8.55% of the country's Gross National Income (GNI) of $79 billion, this decline signals the need for stronger domestic revenue generation, increased private sector participation, and enhanced public-private partnerships (PPPs). As tax revenue remains at only 11% of GDP, Tanzania must prioritize economic reforms to sustain growth amid shifting donor priorities.

Tanzania has experienced a fluctuating trend in Official Development Assistance (ODA) disbursements, with a peak of $761 million in 2013 followed by a gradual decline to $389 million in 2024 and a further projected drop to $118 million in 2025. This reduction has several critical implications:

1. Reduced Future Aid – Strengthening Domestic Revenue
   • In 2024, ODA accounts for 8.55% of Tanzania’s Gross National Income (GNI), indicating its significance in the economy.
   • Government tax revenue stands at 11% of GDP, which is relatively low compared to regional benchmarks (e.g., Kenya at 16% and South Africa at 25%).
   • With declining aid, Tanzania must improve tax collection efficiency, broaden the tax base, and formalize informal sectors to increase revenue generation.
2. Economic Independence – Strengthening Public Finance Management
   • The country’s GNI per capita is $1,200, showing that despite economic growth, a large portion of the population still has low-income levels.
   • Public debt management and financial discipline will be critical to ensure sustainability while reducing dependence on external funding.
3. Donor Shifts – Strategic Adaptation
   • The World Bank Group remains the top donor ($1.095 billion), followed by the U.S. ($429 million) and the Global Fund ($225 million).
   • The decline in aid could mean donors are shifting priorities, focusing on humanitarian crises or new sectors like climate resilience and digital transformation.
   • Tanzania must align its national development plans with donor interests to maintain strategic funding.
4. Public-Private Partnerships (PPP) – Mobilizing Investments
   • The sharp drop in aid from $647 million in 2023 to $118 million in 2025 suggests a pressing need for alternative financing models.
   • Attracting private sector investments in infrastructure, energy, agriculture, and technology through PPP frameworks can bridge the financing gap.
   • Strengthening investment policies and reducing bureaucratic hurdles will make Tanzania more attractive to investors.

The decline in foreign aid is a wake-up call for Tanzania to enhance tax policies, strengthen financial management, align with shifting donor priorities, and attract private sector investment. By focusing on these areas, Tanzania can transition towards sustainable economic growth and reduce its reliance on foreign assistance.

The declining foreign aid to Tanzania highlights key economic challenges and the urgent need for policy shifts:

1. Foreign Aid is Declining

• Tanzania's ODA disbursements peaked at $761 million in 2013 but have been fluctuating since.
• By 2024, aid dropped to $389 million and is projected to decline further to $118 million in 2025.
• This indicates a long-term reduction in donor dependency, forcing Tanzania to seek alternative funding sources.

2. Tanzania Must Strengthen Domestic Revenue Collection

• Tax revenue as a percentage of GDP is only 11%, much lower than in peer countries (e.g., Kenya ~16%).
• With GNI at $79 billion and GNI per capita at $1,200, the economy is growing, but tax efficiency needs improvement.
• Expanding the tax base and formalizing the informal sector can help replace lost donor funding.

3. Donor Priorities are Shifting

• The World Bank ($1.095 billion) remains the largest donor, followed by the U.S. ($429 million) and Global Fund ($225 million).
• Aid cuts suggest donors are redirecting funds to other priority countries or shifting towards new focus areas like climate resilience, technology, and security.
• Tanzania must align its policies with emerging donor interests to maintain funding for key projects.

4. Public-Private Partnerships (PPP) are Essential

• With aid dropping from $647 million in 2023 to a projected $118 million in 2025, Tanzania must fill the funding gap through private investments.
• Attracting private sector participation in infrastructure, agriculture, and industrialization is crucial for long-term economic sustainability.

5. The Path to Economic Independence

• The decline in aid can push Tanzania towards self-reliance, but it requires stronger fiscal management, industrialization, and investment-friendly policies.
• Strengthening PPP frameworks, improving business environments, and reducing bureaucratic barriers will be key to ensuring sustainable economic growth.

Conclusion

The figures tell us that Tanzania can no longer rely on foreign aid as a major economic driver. The country must boost domestic revenue, attract private investments, and adapt to changing donor priorities to ensure stable and sustainable growth.

Table: Tanzania’s ODA Disbursements (2001-2025)

Macroeconomic stability is a key driver of job creation and economic growth in Tanzania. Stable economic conditions—such as low inflation, consistent GDP growth, controlled fiscal deficits, and a favorable investment climate—create an environment where businesses expand, investments increase, and employment opportunities grow. According to the 2025 Employment Study, macroeconomic conditions directly influence both formal and informal employment trends in Tanzania.

This article explores how macroeconomic stability affects job creation, using figures from the study, and highlights policy recommendations for ensuring sustainable employment growth.

Macroeconomic Indicators and Employment Trends in Tanzania

• GDP growth has steadily increased from 5.2% in 2023 to a projected 6.0% in 2025, boosting business confidence and job creation.
• Inflation has declined, improving consumer purchasing power and reducing business costs.
• Fiscal deficits are being controlled, allowing more government spending on infrastructure and job-creating sectors.
• Unemployment is decreasing, reflecting stronger macroeconomic conditions.

How Macroeconomic Stability Affects Job Creation

1. GDP Growth and Employment Expansion

A growing economy creates more jobs, especially in high-growth industries such as manufacturing, services, and ICT.

• Manufacturing employment is projected to grow by 18%, driven by industrialization and PPP investments.
• ICT and digital economy jobs are expected to increase by 22%, supported by fintech and e-commerce growth.

2. Inflation and Wage Stability

Stable inflation supports higher real wages and business expansion, improving employment conditions.

• As inflation decreases, wages increase, improving living standards.
• Lower inflation helps businesses expand, creating more job opportunities.

3. Fiscal Policies and Government Investment in Job-Creating Sectors

Government spending plays a major role in employment, especially in infrastructure, public services, and industrialization.

• 30% increase in infrastructure investment has boosted construction jobs and industrial expansion.
• 18% increase in public service jobs, including education and healthcare employment.

4. Exchange Rate Stability and Foreign Direct Investment (FDI)

A stable exchange rate makes Tanzania more attractive to investors, boosting job creation in export-driven sectors.

• A stronger exchange rate has encouraged more FDI, supporting job creation in manufacturing, tourism, and agribusiness.

Challenges to Job Creation Despite Macroeconomic Stability

• 30% of respondents identified a skills gap, meaning economic growth is not fully translating into employment.
• 25% cited slow SME growth, showing that businesses still struggle despite macroeconomic improvements.

Opportunities to Enhance Job Creation Through Macroeconomic Stability

1. Expanding Vocational Training and Skills Development

Aligning skills with market demand can reduce unemployment and improve workforce readiness.

• 40% job growth expected if digital and ICT skills training is expanded.
• 30% increase in employment projected through technical education programs.

2. Strengthening SME Growth for Job Creation

Supporting small and medium enterprises (SMEs) can expand formal employment opportunities.

• 35% increase in SME jobs expected with better access to financing.

3. Enhancing Investment in Industrialization and PPPs

Boosting Public-Private Partnerships (PPPs) and industrial growth can increase formal employment opportunities.

• 40% job growth expected in Special Economic Zones (SEZs), promoting manufacturing and trade.

Conclusion and Policy Recommendations

Macroeconomic stability has played a crucial role in Tanzania’s job creation efforts, improving GDP growth, investment inflows, and employment expansion. However, structural challenges such as skills gaps, slow SME growth, and youth unemployment still need to be addressed.

Key Policy Recommendations:

1. Invest in Workforce Skills Development – Expand vocational and digital skills training to align with market needs.
2. Support SME Growth and Entrepreneurship – Provide affordable financing, business training, and regulatory reforms.
3. Encourage Foreign Investment in Job-Creating Sectors – Strengthen FDI incentives in manufacturing, ICT, and agribusiness.
4. Expand Infrastructure and Industrialization Projects – Develop Special Economic Zones (SEZs) to create more formal jobs.
5. Ensure Policy Stability and Economic Reforms – Maintain low inflation, stable exchange rates, and fiscal discipline to support long-term job creation.

NOTE:

The research and case studies presented in this report were conducted by Tanzania Investment and Consulting Group Limited (TICGL) to analyze employment trends, macroeconomic stability, and job creation dynamics in Tanzania. The study covered a sample size of 2,500 respondents, representing diverse economic sectors and geographic regions. A mixed-methods approach was employed, integrating quantitative surveys (85%), structured interviews (10%), and focus group discussions (5%) to gather both statistical data and qualitative insights. The research was conducted across six key regions: Dar es Salaam (25% of respondents), Mwanza (18%), Arusha (15%), Dodoma (14%), Mbeya (12%), and Morogoro (16%), ensuring a balance between urban and rural employment patterns.

The findings indicate that Tanzania’s workforce is 71.8% informal (25.95 million workers) and 28.2% formal (10.17 million workers), highlighting a significant divide in job security, wages, and access to social protection. Among the 2,500 surveyed individuals, formal employment accounts for 23% (550 individuals), predominantly in government (32% of formal jobs), banking and financial services (25%), manufacturing (18%), and education and healthcare (15%). On the other hand, informal employment constitutes 49% (1,170 individuals), with key sectors including agriculture (35% of informal workers), small businesses and trade (28%), transportation (15%), and casual labor (12%). The remaining 27% (650 individuals) were unemployed, with youth unemployment (ages 18–35) reaching 33%, significantly higher than the national average of 9.2%.

Employment trends indicate that formal employment is projected to rise to 38% by 2030, driven by industrialization, digital transformation, and policy reforms. However, major barriers continue to slow the transition, including limited job availability (42%), skills mismatches (26%), and bureaucratic challenges (21%). The study also found that women make up 65% of the informal workforce, primarily due to barriers in accessing formal jobs, while 72% of youth are engaged in informal employment due to limited entry-level job opportunities.

To bridge the gap between formal and informal employment, Tanzania must focus on expanding SME growth, strengthening vocational training programs, improving access to financial services for small businesses, and reducing bureaucratic hurdles for business registration. This report emphasizes the key trends, challenges, and opportunities shaping Tanzania’s employment landscape and highlights the role of public-private partnerships, investment in digital workforce expansion, and targeted policy interventions in creating a more structured and inclusive workforce by 2030.

Tanzania’s Economic Growth Strengthens with Rising Credit and Financial Stability

Tanzania's economy has shown strong growth from 2021 to 2024, driven by rising domestic credit, expanding private sector lending, and increasing money supply. Domestic credit grew from 27.37 trillion TZS in 2021 to 46.82 trillion TZS in 2024 (+71%), while private sector lending increased by 72% over the same period, boosting investments and job creation. Additionally, broad money (M3) rose by 47%, and foreign currency deposits surged by 57%, reflecting greater financial confidence and economic resilience. These trends highlight Tanzania’s robust economic expansion and a strengthening financial sector.

Tanzania’s economic performance from 2021 to 2024/2025 has shown positive growth trends, primarily driven by increased credit availability, expanding money supply, and strong private sector growth. The following key indicators explain why Tanzania’s economy is performing well:

1. Strong Growth in Domestic Credit – Economic Expansion

• Domestic credit rose from 27.37 trillion TZS in 2021 to 46.82 trillion TZS in 2024, a 71% increase over four years.
• This growth suggests higher business investments, household consumption, and overall economic expansion.

2. Increased Private Sector Lending – Business Growth

• Claims on the private sector increased from 19.64 trillion TZS in 2021 to 33.76 trillion TZS in 2024, a 72% rise.
• This reflects higher business confidence, increased production, and job creation, all contributing to economic growth.

3. Rising Money Supply – Expanding Financial Sector

• Reserve Money (M0) increased from 7.91 trillion TZS in 2021 to 11.04 trillion TZS in 2024 (40% increase), ensuring liquidity in the banking sector.
• Broad Money (M2) expanded from 24.77 trillion TZS to 35.50 trillion TZS, showing more cash circulation and financial inclusion.
• Extended Broad Money (M3) grew from 32.12 trillion TZS to 47.09 trillion TZS, supporting increased lending and economic transactions.

4. Foreign Currency Deposits (FCD) Growth – Investor Confidence

• Foreign currency deposits rose from 7.35 trillion TZS in 2021 to 11.58 trillion TZS in 2024, indicating a growing trust in the banking sector.
• In 2024, foreign deposits reached 4.35 billion USD, reflecting an increase in foreign investment and trade activity.

5. Recovery of Foreign Financial Assets – Improved External Stability

• While foreign financial assets declined from 12.24 trillion TZS in 2021 to 9.66 trillion TZS in 2023, they recovered to 12.09 trillion TZS in 2024.
• This recovery suggests improved foreign exchange reserves, better trade balance management, and reduced external vulnerabilities.

6. Increased Government Borrowing for Development

• Government net claims increased from 6.50 trillion TZS in 2021 to 11.57 trillion TZS in 2024, indicating more public investment in infrastructure, education, and healthcare.
• While borrowing increased, if well-managed, it supports economic growth through capital projects that drive long-term productivity.

Conclusion – Tanzania’s Economic Strength

From 2021 to 2024, Tanzania has demonstrated consistent economic growth, supported by:
✅ 71% growth in domestic credit, fueling business expansion.
✅ 72% rise in private sector lending, boosting investments and job creation.
✅ Strong money supply growth, ensuring liquidity and financial inclusion.
✅ Increasing foreign currency deposits, reflecting confidence in the banking system.
✅ Recovery of foreign financial assets, improving economic resilience.

Table summary of Tanzania’s economic performance indicators from 2021 to 2024, showing why the economy is performing well:

Key Takeaways from the Table

✅ 71% growth in domestic credit – More loans for businesses and households, leading to higher economic activity.
✅ 72% increase in private sector lending – Boosts business expansion, investment, and job creation.
✅ Broad money (M2 & M3) increased by 43%-47% – Showing higher liquidity and financial inclusion.
✅ Foreign deposits (FCD) rose by 57%, indicating growing investor confidence in Tanzania’s economy.
✅ Foreign financial assets recovered in 2024, improving external stability.
✅ Government credit rose by 78%, signaling investment in infrastructure and development projects.

Tanzania’s National Development Plan for 2025/26 outlines strategic priorities to sustain economic growth, enhance infrastructure, and improve social services. With a projected GDP growth of 6.0%, the plan emphasizes industrialization, investment, agriculture, and public-private partnerships (PPP) to drive development. Key focus areas include energy expansion, transport modernization, job creation, and food security, ensuring a resilient and self-sufficient economy while preparing for Vision 2050.

Key Highlights and Figures:

1. Economic Performance (2024/2025)

• Global Economy: Growth was 3.2% in 2024 and is projected to be 3.3% in 2025. Growth is slowing due to aging populations, reduced productivity in developed countries, and geopolitical tensions.
• Regional Economy:
  • SADC: Growth declined from 5.2% in 2023 to 5.1% in 2024, expected to reach 4.1% in 2025.
  • EAC: Growth slowed from 3.9% in 2023 to 3.4% in 2024, projected to recover to 5.7% in 2025.
• Tanzania’s GDP Growth:
  • Grew by 5.6% in 2024 (Jan-Sept) vs. 5.1% in 2023.
  • Expected to grow 6.0% in 2025 and 6.1% in 2026.
• Inflation:
  • Fell to 3.1% in 2024 (vs. 3.8% in 2023).
  • Tanzania’s inflation target is 3.0%-5.0%, within EAC limits (below 8%).

2. Development Achievements (2019/20 – 2024/25)

3. Budget for 2025/26

• Total Budget: TZS 57.04 trillion
• Development Budget: TZS 19.47 trillion (34.1% of total budget)
• Sources:
  • Domestic funds: TZS 13.32 trillion
  • External funding: TZS 6.15 trillion
• Private Sector Role: Emphasizing Public-Private Partnerships (PPP) to fund development projects.

4. Key Priority Areas for 2025/26

1. Competitive and Inclusive Economy – Infrastructure (transport, ICT, energy), improving business environment.
2. Manufacturing and Services – Boosting industrial productivity.
3. Investment and Trade – Improving regulatory frameworks, tax policies.
4. Human Development – Education, health, water, land planning, youth skill development.
5. Human Capital Development – Strengthening technical and vocational training.

5. Major Government Plans

• Malaria Eradication Campaign: Government to intensify control using locally produced chemicals.
• Reduced Foreign Aid Dependence: Strengthening AIDS Trust Fund, leveraging PPP models for funding.

The plan aligns with Tanzania’s Vision 2025 and is part of the Third Five-Year National Development Plan (2021/22 – 2025/26). The government aims to complete ongoing projects while preparing for Vision 2050. The focus remains on sustaining economic growth, improving social services, and enhancing private sector involvement.

Tanzania’s National Development Plan for 2025/26, outlining the country’s economic performance, achievements, budget allocations, and strategic priorities.

1. Economic Growth & Stability

• Tanzania’s economy is growing steadily, with GDP increasing from 5.1% in 2023 to 5.6% in 2024, and projected at 6.0% in 2025.
• Inflation has remained low and stable at 3.1%, which is within the government’s target range of 3.0% - 5.0%.
• The East African Community (EAC) and SADC economies are slowing due to inflation, global debt, and geopolitical instability, but Tanzania is expected to maintain growth.

2. Development Achievements (2019 – 2024/25)

The government has made significant progress in infrastructure, energy, agriculture, health, and education:

• Electricity production increased from 1,602 MW to 3,077 MW.
• Villages connected to electricity: 8,587 → 12,318 (100% target met).
• Food security remains strong (114% in 2019 → 128% in 2024).
• Tourism has recovered, with tourist numbers growing from 1.03 million (2019) to 4.24 million (2024), boosting foreign exchange earnings.
• Irrigated agriculture expanded to 983,466 hectares, supporting food production.

3. Budget Priorities for 2025/26

• The total budget is TZS 57.04 trillion, with 34.1% (TZS 19.47 trillion) dedicated to development projects.
• Funding sources:
  • TZS 13.32 trillion from domestic revenue.
  • TZS 6.15 trillion from external financing.
• Public-Private Partnerships (PPP) will be expanded to reduce dependence on foreign aid.

4. Key Priorities for 2025/26

• Infrastructure Development: Completion of SGR railway, road networks, ports, and energy projects.
• Agriculture & Food Security: Expanding irrigation, mechanization, and agribusiness investment.
• Industrialization & Investment: Encouraging local and foreign investment in manufacturing and services.
• Health & Education:
  • Expanding public health services and strengthening malaria eradication programs.
  • Enhancing vocational and technical training to improve youth employment.

5. Future Outlook

• Tanzania is on track to maintain strong economic growth and complete Vision 2025 goals before transitioning to Vision 2050.
• Self-sufficiency in key sectors like food, energy, and healthcare will be prioritized.
• Private sector involvement will be key to funding national projects through PPPs.

Overall Message

• Tanzania is making solid progress toward economic transformation and social development.
• The government is reducing dependency on foreign aid while boosting domestic investment.
• Key focus areas in 2025/26: Economic growth, infrastructure, agriculture, manufacturing, education, and healthcare.

Between 2013 and 2024, Tanzania's economic growth showcased sectoral resilience and dynamism, with standout performances in ICT (13.2% Q4 2020), Construction (28.8% Q4 2016), and Agriculture (14.7% Q2 2016). Despite global challenges like COVID-19, which saw Accommodation & Restaurants plummet by 25.1% (Q2 2020), recovery has been robust across industries. This analysis highlights key drivers, sectoral contributions, and the evolving economic landscape underpinning Tanzania's sustainable growth ambitions.

Pre-2020 and post-2020):

Agriculture

• Overall Average Growth Rate: 5.2%
• Pre-2020 Average (2013Q1–2019Q4): 5.5%
• Post-2020 Average (2020Q1–2024Q3): 4.7%
• Key Observations: Growth was steady pre-2020, but post-2020, the growth rate declined slightly, possibly reflecting challenges from global economic shocks like the pandemic.

Industry and Construction

Mining and Quarrying

• Overall Average Growth Rate: 7.7%
• Pre-2020 Average: 10.6%
• Post-2020 Average: 4.3%
• Key Observations: High volatility was observed, with peaks such as 27.2% in 2015Q4, but significant dips post-2020 indicate reduced activity or market challenges.

Manufacturing

• Overall Average Growth Rate: 6.7%
• Pre-2020 Average: 7.8%
• Post-2020 Average: 4.5%
• Key Observations: Manufacturing experienced robust growth pre-2020, driven by infrastructure and industrialization programs, but faced a notable decline post-2020.

Electricity

• Overall Average Growth Rate: 8.5%
• Pre-2020 Average: 8.7%
• Post-2020 Average: 8.2%
• Key Observations: A relatively stable sector with consistent growth, though marked by occasional negative quarters, e.g., -10.2% in 2015Q3.

Water

• Overall Average Growth Rate: 5.4%
• Pre-2020 Average: 6.4%
• Post-2020 Average: 3.9%
• Key Observations: Moderate but fluctuating growth; stronger performance pre-2020 with occasional contractions, e.g., -7.1% in 2013Q3.

Construction

• Overall Average Growth Rate: 12.5%
• Pre-2020 Average: 14.8%
• Post-2020 Average: 8.1%
• Key Observations: One of the fastest-growing sectors pre-2020 due to infrastructure projects but faced a slowdown post-2020.

Services

Trade and Repair

• Overall Average Growth Rate: 5.0%
• Pre-2020 Average: 6.2%
• Post-2020 Average: 3.4%
• Key Observations: Post-2020 recovery has been slow after contractions in sectors dependent on consumer spending.

Accommodation and Restaurant

• Overall Average Growth Rate: 3.5%
• Pre-2020 Average: 4.3%
• Post-2020 Average: 2.2%
• Key Observations: This sector was severely affected by the pandemic, especially in 2020, with -25.1% in 2020Q2.

Transport and Storage

• Overall Average Growth Rate: 7.5%
• Pre-2020 Average: 8.4%
• Post-2020 Average: 5.7%
• Key Observations: A steady performer but saw reduced growth post-2020 due to reduced logistics and mobility.

Information and Communication

• Overall Average Growth Rate: 8.8%
• Pre-2020 Average: 9.1%
• Post-2020 Average: 8.4%
• Key Observations: Growth was relatively resilient, benefiting from digital adoption during and post-pandemic.

Financial and Insurance

• Overall Average Growth Rate: 5.6%
• Pre-2020 Average: 6.0%
• Post-2020 Average: 5.0%
• Key Observations: Modest growth with signs of recovery in post-pandemic years.

Insights

1. High Growth Sectors (2013-2024): Construction (12.5%), Information and Communication (8.8%), and Mining and Quarrying (7.7%).
2. Pandemic Impact: Significant slowdowns in sectors like Manufacturing, Trade, Accommodation, and Construction.
3. Resilient Sectors: Information and Communication, Financial Services, and Electricity showed consistent growth despite economic challenges.

GDP growth rates by activity at constant 2015 prices reflects the economic performance of various sectors over time

1. Sectoral Contribution and Volatility

• Agriculture: Generally steady growth, with an average growth rate of around 4–6%. Occasional spikes (e.g., Q2 2016 at 14.7%) reflect good harvests or favorable conditions. Declines or low growth (e.g., Q4 2022 at 1.9%) suggest challenges like climate effects.
• Industry and Construction:
  • Mining and Quarrying: Highly volatile, with significant spikes (e.g., Q4 2015 at 27.2%) and contractions (e.g., Q1 2013 at -11.5%). This indicates sensitivity to global commodity prices and policy changes.
  • Manufacturing: A relatively stable upward trend, with growth clustering around 5–8%. Spikes (e.g., Q3 2016 at 13.7%) indicate periods of high industrial activity or exports.
  • Construction: Substantial growth (e.g., Q4 2016 at 28.8%) tied to infrastructure development projects, reflecting government investment. Recent years (e.g., 2022–2024) show a slowdown, averaging around 3–5%.

2. Services Sector Trends

• Trade and Repair: A cyclical trend with growth peaking around 9–12% in robust periods. Declines (e.g., Q2 2020 at -0.2%) likely reflect the COVID-19 impact on commerce.
• Accommodation & Restaurants: Hit hard during COVID-19 (e.g., Q2 2020 at -25.1%) but recovering sharply in later years (e.g., Q1 2021 at 10.1%). This reflects the sensitivity of tourism-related services to external shocks.
• Transport and Storage: Moderate, steady growth (average 5–9%), with occasional dips, possibly tied to trade volumes or logistics challenges.
• Information and Communication: Consistently high growth (e.g., averaging 8–13%), underscoring the rapid digitalization and expansion of mobile services.
• Financial and Insurance Services: Volatile, with significant growth after downturns (e.g., 2021–2023 averages 9–12%). This may indicate policy-driven financial inclusion efforts or global financial trends.

3. Public Sector Influence

• Public Administration: Sustained growth averaging 5–10%, with some slowdowns, possibly reflecting government budget adjustments or economic shocks.
• Professional and Technical Activities: Strong early growth, tapering off over the years, possibly as the sector matures.

4. Key Observations

• COVID-19 Impact: Sharp contractions are visible across sectors (e.g., Q2 2020), followed by recovery. The tourism and hospitality sectors faced the largest impacts.
• Infrastructure Development: Growth in construction and manufacturing aligns with government infrastructure projects and industrialization efforts.
• Digital Transformation: Information and communication growth highlights the importance of the ICT sector as a driver of modernization.
• Agricultural Stability: Agriculture remains resilient but vulnerable to climate and external market conditions.

Implications

• Diversification: The reliance on specific sectors like mining or ICT indicates a need for broader economic diversification to reduce vulnerability to shocks.
• Policy Focus: Investments in infrastructure, digital technology, and tourism can drive sustained growth.
• Resilience Building: Agriculture and trade require resilience strategies to mitigate risks from climate and global trade disruptions.

The average GDP growth rates for Tanzania across selected periods

Tanzania’s current account balance, a vital indicator of its trade and investment flows, has witnessed significant improvement over the past four decades. From a peak deficit of -17.3% of GDP in 1993, reflecting economic imbalances, Tanzania has made strides to reduce this figure to an estimated -2.5% by 2029. While it outperforms Burundi (-18.9%) and Rwanda (-7.5%), Tanzania's deficit remains higher than Kenya’s (-4%) and Uganda’s (-2.6%). These figures highlight Tanzania’s economic transformation and its growing competitiveness in East Africa’s dynamic economic landscape.

1. Trends in Tanzania's Current Account Balance

• 1980s: Tanzania had moderate deficits, averaging around -4.5% of GDP.
  • High point: -2.0% (1983).
  • Low point: -5.2% (1987 and 1989).
• 1990s: The deficit worsened significantly, peaking at -17.3% in 1993 due to macroeconomic imbalances and external shocks.
• 2000s: The deficit narrowed in early years but widened to -7.7% in 2008, driven by increased imports and investment.
• 2010s: Gradual improvement as deficits reduced, attributed to improved exports, reduced oil imports, and favorable exchange rates.
  • Best year: -2.8% (2018).
  • Worst year: -11.6% (2012).
• 2020s: Continued stability, with deficits around -2.5% projected up to 2029.

2. Comparison with Other East African Countries

Burundi:

• Historically struggled with high deficits, peaking at -32.4% (2007) and maintaining double-digit deficits post-2010.
• Structural weaknesses in trade and low export diversification contribute to persistently high deficits.

Kenya:

• Moderate deficits, generally stable compared to other East African countries.
  • Improved during the 1990s, briefly achieving surpluses (e.g., 1993: +8.6%).
  • Post-2000s, deficits ranged from -3% to -9%, indicating sustained import reliance.

Rwanda:

• Moderate deficits until the 2010s, after which they worsened, peaking at -15.3% (2017).
• Improvements observed recently, with deficits projected around -7.5% in 2029.

Uganda:

• Generally low deficits, similar to Kenya in the 1980s and 1990s.
  • Peaked in 2020 at -9.5% due to reduced exports during the COVID-19 pandemic.
  • Projected to recover to a deficit of around -2.6% by 2029.

3. Tanzania's Relative Position

• Stability: Tanzania's current account balance has been more stable than Burundi and Rwanda, with deficits consistently below -12% since 2015.
• Competitiveness: Compared to Kenya and Uganda, Tanzania's deficits are slightly higher but have shown steady improvement.
• Recent Projections: By 2029, Tanzania is projected to maintain a deficit of -2.5%, positioning it among the more stable economies in the region.

4. Regional Patterns

• Burundi and Rwanda: High deficits reflect reliance on aid and low export bases.
• Kenya and Uganda: Moderate deficits indicate better trade management and diversified economies.
• Tanzania: Positioned as a middle-ground performer, with significant improvements driven by better fiscal policies, economic reforms, and investment.

Key Takeaways

• Tanzania’s Current Account Deficits: Have decreased significantly, reflecting economic improvements and fiscal discipline.
• Regional Performance: While Tanzania fares better than Burundi and Rwanda, it trails Kenya and Uganda in reducing deficits.
• Outlook: Tanzania’s consistent policy measures and growing exports could improve its position further.

The current account balance as a percentage of GDP provides critical insights into a country's economic health, particularly regarding trade, savings, and investment. What Tanzania's figures and its comparison to other East African countries tell us

1. Tanzania’s Economic Position

• Persistent Deficits: Tanzania has consistently had a current account deficit, meaning it imports more goods, services, and capital than it exports. This can indicate:
  • Reliance on foreign goods, services, or investment.
  • Challenges in domestic production or export capacity.
• Improvement Over Time: The reduction in deficits, particularly since the 2010s, shows:
  • Economic reforms and better fiscal policies.
  • Growth in exports, especially in sectors like agriculture, minerals, and tourism.
  • Controlled import costs due to diversification of local production.

2. Economic Health and Sustainability

• Investment-Driven Growth: Persistent deficits are not inherently bad if they fund productive investments, as seen in Tanzania's infrastructure projects like ports, railways, and energy. This can:
  • Boost long-term growth.
  • Improve export capacity.
• Risks of High Deficits: Periods of larger deficits, such as in the 1990s and early 2000s, reflect economic vulnerabilities, including:
  • Heavy reliance on foreign aid or debt.
  • Exposure to external shocks like global oil price changes.

3. Regional Competitiveness

• Middle Performer: Tanzania performs better than Burundi and Rwanda, which face chronic trade and fiscal challenges, but lags behind Kenya and Uganda in maintaining lower deficits.
  • Kenya and Uganda: Stronger export bases and better trade balances contribute to their relatively lower deficits.
  • Tanzania: Improvements suggest potential for catching up, especially with its natural resource wealth and ongoing industrialization.

4. Structural Economic Challenges

• Reliance on Imports: Tanzania's imports of machinery, equipment, and fuel often outweigh exports. Addressing this requires:
  • Enhancing domestic manufacturing and industrial sectors.
  • Expanding export markets.
• Trade Composition: Exports remain concentrated in a few sectors (e.g., gold, agricultural products), making the country vulnerable to price fluctuations.

5. Policy Implications

• Strengthening Exports: Policies should focus on:
  • Diversifying export products.
  • Expanding markets, particularly in regional and international trade.
• Reducing Import Dependency: Promoting local industries and value-added production can help manage deficits.
• Sustainable Financing: Ensuring that deficits are used for productive investments rather than consumption to avoid unsustainable debt levels.

Broader Interpretation

• Growth Potential: Tanzania's improving trend signals a positive outlook for economic growth and trade balance stabilization.
• Development Challenges: The country still faces structural barriers to becoming a trade-surplus economy, such as reliance on primary commodity exports and limited industrial capacity.
• Regional Leadership: With continued improvement, Tanzania can leverage its geographic and resource advantages to strengthen its position as a leading East African economy.

Tanzania’s external sector showcased remarkable strength in November 2024, with the current account deficit narrowing by 35% to USD 2,025.8 million. Exports surged by 14.2% to USD 15,872.9 million, driven by gold and tourism, while imports grew modestly by 2.7%. Foreign exchange reserves increased to USD 5,056.8 million, covering 4.1 months of imports, exceeding benchmarks. This performance highlights Tanzania’s growing global competitiveness and economic resilience, ensuring a stable foundation for sustainable growth.

The external sector demonstrated notable improvements in November 2024, driven by robust export growth, a reduced current account deficit, and strong foreign exchange reserves. These factors underline the resilience and recovery of Tanzania's economy.

1. Current Account Balance

• The current account deficit narrowed significantly by 35% to USD 2,025.8 million in the year ending November 2024, compared to USD 3,115.8 million in the corresponding period in 2023.
• This improvement was attributed to strong export performance and controlled import growth.

2. Exports

• Total Exports: Increased by 14.2% to USD 15,872.9 million in the year ending November 2024, up from USD 13,901.2 million in the same period in 2023.
• Goods Exports:
  • Rose to USD 8,887.1 million, compared to USD 7,771.7 million in 2023.
  • Mineral exports dominated, with gold alone contributing USD 3,320.9 million, accounting for 83.1% of mineral exports and 37.4% of total goods exports.
• Services Exports:
  • Increased to USD 6,985.9 million, up by 14% year-on-year, driven by growth in tourism receipts and transportation earnings.
  • Tourism receipts: Grew by 11.1% to USD 3,681.5 million, supported by increased tourist arrivals (2,106,870 tourists, compared to 1,781,214 in 2023).

3. Imports

• Total Imports: Grew modestly by 2.7% to USD 16,582.7 million, compared to USD 16,142.1 million in 2023.
• Goods Imports: Accounted for 85% of the total import bill, driven by industrial supplies and refined petroleum products.
  • Petroleum imports: Declined by 7% to USD 2,578.5 million, primarily due to favorable price effects.

4. Foreign Exchange Reserves

• Reserves rose to USD 5,056.8 million, up from USD 4,850.8 million in November 2023.
• The reserves were sufficient to cover 4.1 months of projected imports, meeting and exceeding the national benchmark of 4 months.

Key Figures in Summary

Implications:

1. Export-Led Recovery:
   • The substantial growth in exports, particularly from gold and tourism, highlights the resilience of Tanzania's external sector and its role in economic recovery.
2. Sustainable Import Growth:
   • Modest growth in imports, with a decline in petroleum imports, reflects effective management of import bills despite global challenges.
3. Strengthened External Resilience:
   • The increase in foreign exchange reserves and a narrowing current account deficit underscore Tanzania's improved ability to weather external shocks and maintain macroeconomic stability.

The external sector's performance in November 2024 illustrates Tanzania's growing strength in exports, particularly in minerals and tourism, coupled with controlled imports and robust reserve levels. This positions the economy well for sustainable growth and resilience against global uncertainties.

Tanzania's external sector performance in November 2024 highlight several important trends and insights about the country's economic standing and resilience

1. Positive Export Performance Drives Recovery

• The 14.2% growth in total exports (to USD 15,872.9 million) signals Tanzania's increasing competitiveness in global markets, especially in key sectors like gold mining and tourism.
• Tourism receipts grew by 11.1%, supported by higher tourist arrivals, emphasizing the sector's role as a major foreign exchange earner.

2. Controlled Import Growth Reflects Stability

• The 2.7% rise in imports demonstrates Tanzania's ability to manage its import bills effectively, ensuring that the trade deficit does not widen excessively.
• The 7% decline in petroleum imports reflects price advantages and efficient consumption, contributing to reduced external pressure.

3. Narrowed Current Account Deficit Signals Economic Improvement

• The 35% reduction in the current account deficit to USD 2,025.8 million shows improved external balances, supported by strong export earnings and controlled import bills.
• This reduction boosts the country's ability to withstand external shocks and enhances investor confidence.

4. Strengthened Foreign Exchange Reserves Indicate Resilience

• Reserves reached USD 5,056.8 million, covering 4.1 months of imports, exceeding the national benchmark. This signals robust external sector health and the ability to manage future trade or financial shocks.

5. Implications for Economic Stability

• Improved External Balances: Growth in exports coupled with a narrowing deficit reflects Tanzania's strengthening position in international trade.
• Reduced Vulnerability: Higher foreign exchange reserves and a slower pace of depreciation indicate greater resilience to global uncertainties.
• Sectoral Contribution: Gold and tourism emerge as pivotal drivers of the economy, underscoring the importance of further developing these sectors.

Key Takeaways

1. Economic Resilience: The narrowing current account deficit and growing reserves underline Tanzania's improving external stability.
2. Export Diversification Potential: While gold and tourism dominate, there is potential to expand other export sectors for sustained growth.
3. Global Competitiveness: The performance of key exports reflects Tanzania's ability to leverage favorable global conditions and enhance its economic footprint.

Conclusion

The external sector performance in November 2024 tells a story of recovery, resilience, and growth. Tanzania is strengthening its global economic position through robust exports, effective import management, and growing foreign exchange reserves, laying a strong foundation for sustainable economic progress.

In November 2024, the Bank of Tanzania maintained a cautious yet supportive monetary policy to ensure economic stability. With a 7-day Interbank Cash Market (IBCM) rate averaging 8.29%, slightly above the Central Bank Rate (CBR) of 6%, the policy aimed to balance liquidity amid high seasonal cash demands for crop purchases. The extended broad money supply (M3) grew by 13.6%, driven by foreign asset growth, while private sector credit expanded by 15.3%, highlighting strong economic activity, particularly in agriculture and SME financing. This measured approach reflects the Bank’s commitment to fostering sustainable growth and financial stability.

Policy Implementation

• The Bank of Tanzania maintained a 7-day Interbank Cash Market (IBCM) rate within a corridor of ±200 basis points around the Central Bank Rate (CBR), set at 6%.
• The 7-day IBCM rate averaged 8.29%, slightly above the CBR corridor, due to low liquidity in the banking sector influenced by seasonal cash demands for crop purchases.

Liquidity Management

• Reverse repurchase agreements (reverse repos) decreased to TZS 2,578.5 billion, from TZS 2,887.9 billion in October 2024.
• Lombard facility usage also declined to TZS 3,870.4 billion from TZS 5,601.1 billion in October.

Money Supply

• Extended broad money supply (M3) grew by 13.6%, driven by foreign asset increases in the banking sector.
• Private sector credit expanded by 15.3%, a slight deceleration from 17% in October and 18.3% in November 2023.

Figures

1. Interest Rates:
   • IBCM 7-day rate: Averaged 8.29% in November 2024.
   • Central Bank Rate (CBR): Set at 6%.
2. Monetary Transactions:
   • Reverse repos: TZS 2,578.5 billion.
   • Lombard facility: TZS 3,870.4 billion.
3. Money Supply Components:
   • M3: TZS 49,510.7 billion, growing at 13.6% annually.
   • Private Sector Credit: Grew at 15.3%.
4. Credit Allocation:
   • Significant growth in agriculture (41.9%), personal loans (19.2%), and building & construction (16.6%).

The monetary policy report highlights the Bank of Tanzania's actions and the state of monetary indicators in November 2024, offering insights into the economic environment

Policy Stance

1. Monetary Tightening:
   • The slightly elevated 7-day Interbank Cash Market (IBCM) rate (8.29%) compared to the Central Bank Rate (CBR) (6%) suggests tightened liquidity conditions. This reflects the seasonal cash demand for crop purchases, especially after a bumper harvest.
2. Controlled Liquidity Management:
   • The use of reverse repos and the Lombard facility to manage liquidity declined, indicating an improvement in banking sector liquidity.

Economic Activity Reflected Through Money Supply

1. Money Supply Growth (M3):
   • The 13.6% growth in M3 is healthy and suggests adequate liquidity in the economy to support economic activities.
   • The growth was driven primarily by foreign currency deposits, reflecting the importance of foreign inflows.
2. Private Sector Credit Growth:
   • A 15.3% expansion in private-sector credit shows strong credit demand and confidence in economic activities. However, the slight decline from previous months (17% in October) hints at moderating credit expansion.
3. Sectoral Focus:
   • The highest credit growth in agriculture (41.9%) signals robust demand for financing in the sector, likely tied to crop purchases and investment in production.
   • Personal loans dominate total credit (38.7%), reflecting their importance in consumption and SME financing.

Key Implications

1. Economic Resilience:
   • Despite seasonal liquidity pressures, the monetary system is effectively balanced, ensuring adequate support for economic activities without overheating.
2. Agriculture as a Driver:
   • The strong focus on agriculture financing suggests the sector's critical role in the economy, especially during harvest periods.
3. Sustainable Credit Growth:
   • Moderate private sector credit growth ensures economic expansion without excessive risks of inflation or non-performing loans.
4. Foreign Influence:
   • The prominence of foreign currency deposits highlights Tanzania's reliance on international trade, tourism, and remittances for liquidity.

Policy Outlook

The report suggests the Bank of Tanzania is maintaining a cautious yet supportive monetary stance, balancing liquidity to promote growth while containing inflationary pressures. The focus on agriculture and personal loans supports essential sectors of the economy.

Tanzania, as a key player among East African low-income countries, faces significant hurdles in achieving middle-income status. While progress in areas like agriculture and infrastructure development has been modest, the nation’s untapped potential in industrialization, tourism, and regional trade offers avenues for growth. By addressing challenges such as low productivity, poverty reduction, and governance reforms, Tanzania can emulate the successes of regional peers like Ethiopia and Rwanda to accelerate its economic transformation.

Tanzania’s Position Relative to East Africa and LICs

1. Economic Growth:
   • Per capita GDP growth in LICs, including Tanzania, has been slow. Median growth for LICs was just 1.5% (2000-09), dropping further to 1.3% (2010-19), and 0.1% (2020-24)​.
   • Among East African countries, Ethiopia and Rwanda outpaced others, with annual per capita growth rates of 6.5% and 4.6%, respectively, over the same periods​.
2. Poverty Reduction:
   • LICs, including many in East Africa, saw a decline in extreme poverty by 17 percentage points since 2000, slower compared to middle-income transitions​.
   • In Tanzania, agriculture and services remain key sectors but lag in productivity compared to industrialized sectors​.
3. Structural Transformation:
   • The share of agriculture in employment remains high across LICs, averaging 28% of GDP, higher than in transitioning middle-income nations, which show more balanced outputs between agriculture, industry, and services​.
4. Productivity and Employment:
   • Agricultural productivity in LICs grew slower than in other sectors, while service and industrial sectors showed more dynamism in countries like Kenya and Uganda, highlighting Tanzania's potential for improvement​.

Key Regional Comparisons

• Ethiopia and Rwanda have experienced robust structural changes driven by policy reforms and investment in industrialization, making them standout performers in East Africa.
• Kenya's growth is supported by better trade openness and service sector expansions​.
• Tanzania's economic prospects are tied closely to its agricultural productivity and untapped potential in industrialization and tourism.

Recommendations for Tanzania

• Sectoral Reforms:
  • Accelerate industrial development to reduce the over-reliance on agriculture.
  • Improve governance to attract more investments and integrate regional trade opportunities.
• Poverty and Productivity:
  • Invest in agricultural modernization to boost productivity and reduce poverty more effectively.
  • Leverage youthful demographics for labor-intensive sectors.

The challenges and opportunities facing low-income countries (LICs), including Tanzania, and provides a context for understanding its position within East Africa and globally.

1. Economic Position of LICs:

• LICs are struggling to achieve middle-income status, with slow economic growth and high levels of poverty.
• Tanzania, as an LIC, shares similar challenges with other East African nations, such as reliance on agriculture, limited industrialization, and weak institutional frameworks.

2. East Africa’s Economic Standouts:

• Ethiopia and Rwanda demonstrate strong growth due to structural reforms, investment in infrastructure, and industrial policies.
• Kenya benefits from a more diversified economy, trade openness, and vibrant services sector.
• Tanzania, while progressing, lags behind these countries in structural transformation and industrial growth.

3. Challenges for Tanzania:

• Low Productivity in Agriculture: Agriculture accounts for a large share of GDP but remains low in productivity, limiting income growth.
• Limited Industrialization: Tanzania has not transitioned enough labor and output into higher productivity sectors like manufacturing.
• Poverty Stagnation: Extreme poverty reduction has slowed, with a significant portion of the population still living on less than $2.15 a day.

4. Opportunities for Tanzania:

• Demographics: A youthful population can drive economic growth if educated and employed productively.
• Natural Resources: Abundant resources, such as minerals and tourism potential, can fuel growth if managed effectively.
• Regional Integration: Leveraging East African Community (EAC) trade and infrastructure projects can enhance competitiveness and market access.

5. Lessons from East Africa:

• Ethiopia and Rwanda: Investments in industrial parks, export-oriented policies, and agricultural modernization have spurred growth.
• Kenya: A strong private sector and focus on trade services have boosted economic resilience.
• Tanzania’s Potential: By learning from these successes, Tanzania can prioritize:
  • Infrastructure development.
  • Agricultural productivity reforms.
  • Policies to attract foreign investment and foster industrialization.

6. Policy Recommendations:

• Investment in Human Capital: Enhance education and healthcare to build a productive workforce.
• Structural Reforms: Simplify business regulations, improve governance, and foster public-private partnerships (PPPs).
• Climate Adaptation: Address vulnerabilities to climate shocks by investing in resilient infrastructure and sustainable practices.

7. Global Context:

• LICs like Tanzania face external pressures such as declining global trade growth, high debt burdens, and geopolitical tensions.
• International assistance (e.g., concessional financing and debt relief) is critical for Tanzania to sustain investments in growth and poverty reduction.

Implications for Tanzania:

Tanzania has significant growth potential but must address critical bottlenecks in governance, productivity, and industrialization. Learning from regional peers and leveraging its demographic and resource advantages could fast-track its transition to middle-income status. This requires strategic investments, effective policies, and stronger regional and global integration.