Tanzania continues to demonstrate remarkable economic stability with low and controlled inflation. As of January 2026, the headline inflation rate stands at 3.3%, reflecting a moderate decrease from 3.6% recorded in December 2025. This positive trajectory underscores the effectiveness of Tanzania's monetary policy framework and macroeconomic management.
The Consumer Price Index (CPI) has risen from 117.57 in January 2025 to 121.41 in January 2026, representing a year-on-year increase of 3.3%. Tanzania's inflation has remained consistently below the 5% threshold since 2021, demonstrating strong price stability even amid global economic uncertainties.
Key Highlights:
Inflation methodology follows UN COICOP 2018 classification with 2020 as the base year (2020=100)
Core inflation at 2.2% indicates effective control of underlying price pressures
Food inflation (5.7%) remains the highest category but shows improvement from 6.7%
Energy inflation (4.6%) has eased significantly from peaks of 9%+ in 2022-2024
Understanding Tanzania's inflation journey over the past five years provides crucial context for current economic conditions. The period from 2021 to 2026 has witnessed significant global economic events, including the COVID-19 recovery, the Russia-Ukraine conflict, and worldwide commodity price volatility. Tanzania has navigated these challenges with notable resilience.
Table 1: Historical Annual Average Inflation Rates (2021-2026)
Year
Headline Inflation
Core Inflation
Non-Core Inflation
Food & Beverages
Energy/Fuel
Key Drivers
2021
3.7%
4.1%
2.5%
~3-4%
3.1%
Transport, Food
2022
4.3%
3.0%
8.2%
7.3%
9.1%
Global Commodity Shocks
2023
3.8%
~3.5%
~2.2%
2.1%
9.3%
Easing Food Prices
2024
3.1%
3.4%
2.2%
2.1%
9.3%
Continued Downward Trend
2025
3.3%
2.2%
6.2%
6.4%
4.3%
Food Price Rebound
2026 (Jan)
3.3%
2.2%
6.0%
5.7%
4.6%
Stabilizing
📊 Key Insight: Inflation Peak and Recovery
Inflation peaked at 4.3% in 2022 due to unprecedented global economic shocks, including supply chain disruptions, the Russia-Ukraine conflict, and soaring energy prices. However, Tanzania's proactive monetary policy and effective macroeconomic management led to a swift decline to 3.1% in 2024. The slight increase to 3.3% in 2025-2026 is primarily attributed to food price rebounds, while energy inflation has moderated significantly.
Historical Inflation Trends (2021-2026)
Detailed Historical Analysis
2021: Post-Pandemic Recovery
The year 2021 marked Tanzania's economic recovery from the COVID-19 pandemic. With headline inflation at 3.7%, the economy demonstrated resilience. Core inflation stood at 4.1%, slightly higher than the headline rate, indicating some underlying demand pressures. Transport and food sectors were the primary drivers during this period.
2022: Global Shocks and Peak Inflation
2022 witnessed the highest inflation rate in the five-year period at 4.3%, primarily driven by global commodity shocks following the Russia-Ukraine conflict. Energy/fuel inflation surged to 9.1%, while food inflation reached 7.3%. Non-core inflation spiked to 8.2%, reflecting the volatile nature of global commodity markets. Despite these challenges, Tanzania's inflation remained moderate compared to many global economies that experienced double-digit inflation.
2023-2024: Stabilization and Decline
The period from 2023 to 2024 marked a significant stabilization phase. Food inflation eased dramatically from 7.3% (2022) to just 2.1% (2023-2024), contributing to the overall decline in headline inflation to 3.1% by 2024. Core inflation remained stable around 3.4-3.5%, while energy/fuel inflation, though still elevated at 9.3%, represented a persistent challenge from global energy markets.
2025-2026: Food Price Rebound with Overall Stability
The most recent period shows food inflation rebounding to 6.4% (2025) and 5.7% (January 2026), likely due to weather patterns and agricultural production cycles. However, this has been offset by significant improvement in energy inflation (down to 4.3-4.6%) and exceptionally strong core inflation control at 2.2%, resulting in headline inflation remaining stable at 3.3%.
Core vs Non-Core Inflation Comparison (2021-2026)
💡 Policy Success Indicator
Core inflation at 2.2% is a critical indicator of effective monetary policy. Core inflation excludes volatile items like food and energy, measuring underlying price pressures in the economy. The current low core inflation demonstrates that the Bank of Tanzania's monetary policy has successfully controlled demand-driven inflation, even as certain categories like food experience temporary price increases.
Tanzania Economic Analysis 2026: President Samia's First 100 Days | TICGL
TICGL Research — February 2026
Tanzania Economic Analysis 2026: President Samia's First 100 Days
A comprehensive data-driven evaluation of Tanzania's macroeconomic performance, sectoral dynamics, infrastructure milestones, fiscal position, and economic outlook — covering October 2025 to February 2026.
Published: February 10, 2026
Sources: Bank of Tanzania, IMF, World Bank, NBS
Second Term Evaluation: Oct 29, 2025 – Feb 5, 2026
GDP Growth 2025
6.0%
▲ from 5.5% in 2024
Gold Exports
$4.7B
▲ Record High 2025
Inflation (2025 avg)
3.3%
✓ Within 3–5% Target
Forex Reserves
$6.3B
4.9 months imports
Tourism Revenue
$4.3B
▲ 11.4% arrivals
IMF GDP Outlook 2026
6.3%
Projected Growth
Public Debt/GDP
49.6%
▼ to 48.3% by 2026
ES Executive Summary
Overview: Economic Resilience Amid Political Transition
President Samia Suluhu Hassan was inaugurated for her second term on November 3, 2025, following the general election on October 29, 2025 where she secured 97.66% of the vote. Her first 100 days — evaluated through February 5, 2026 — present a paradox of strong macroeconomic fundamentals coexisting with significant political and governance challenges.
Tanzania's economy demonstrated robust performance with GDP growth reaching 6.0% annually in 2025, driven by record gold exports of $4.7 billion, a booming tourism recovery generating $4.3 billion in revenues, and the landmark completion of the Julius Nyerere Hydropower Project — the largest dam in East Africa. Inflation remained well within the Bank of Tanzania's 3–5% target at an annual average of 3.3%.
🔍 TICGL Key Finding
While Tanzania's headline growth metrics are among the strongest in Sub-Saharan Africa, growth has not been sufficiently inclusive. GDP grew 37.5% nominally from 2020–2025, yet urban wages rose only 5.3% and rural wages 4.9% over the same period — effectively stagnant in real terms. The effective inflation rate for the poorest 50% is estimated at 5.5–6.5%, far above the official 3.4% headline.
6.0%
GDP Growth 2025
$4.7B
Gold Exports Record
2,115 MW
Julius Nyerere Dam Capacity
3.3%
Annual Average Inflation
53,000+
New Jobs Created
$6.3B
Foreign Reserves (Jan 2026)
01 Political & Economic Context
1. Political and Economic Context of the Second Term
1.1 Election Context (October 2025)
The October 2025 election, while decisive in outcome, was marked by significant controversy. Key opposition parties — Chadema and ACT-Wazalendo — were excluded from the ballot. An internet blackout was imposed on election day and subsequent days. Post-election unrest resulted in reported casualties, drawing sharp international criticism from the African Union, European Union, and SADC election observers.
1.2 Government Response
In her inaugural address to the 13th Parliament on November 14, 2025, President Hassan announced four landmark commitments designed to stabilise the post-election environment and set a progressive development agenda:
Commitment
Details
Status
Enquiry Commission
Independent body to investigate post-election events and unrest
In Progress
Reconciliation Commission
Commission for Reconciliation and Mediation across political divides
In Progress
Constitutional Rewrite
Commitment to begin process within the first 100 days
Initiated
Tanzania Vision 2050
Ambitious long-term national development framework launched
Launched
⚠ Political Risk Note
The United States imposed partial travel restrictions effective January 1, 2026, reflecting concerns about democratic governance. These restrictions create potential headwinds for FDI and tourist arrivals from key markets, and may affect bilateral aid and development partner support.
02 Macroeconomic Performance
2. Macroeconomic Performance (Q4 2025)
2.1 GDP Growth Trajectory
Tanzania's economy demonstrated strong performance in 2025, with GDP growth reaching 6.0% annually, up from 5.5% in 2024. The second quarter showed particularly robust expansion at 6.3%, driven primarily by agriculture, mining, and construction. The IMF projects continued growth at 6.3% for 2026 and 6.3–6.5% through 2028, positioning Tanzania as one of Africa's fastest-growing large economies.
Tanzania Real GDP Growth Rate (%)
Annual growth 2020–2026 (2026 = IMF projection) — Source: IMF, Bank of Tanzania
Year
GDP Growth (%)
GDP (USD Billion, est.)
IMF Sub-Saharan Africa Avg
Performance vs Region
2020
1.9%
62.4
−1.6%
+3.5 pp
2021
4.3%
67.8
4.7%
−0.4 pp
2022
4.7%
75.5
3.9%
+0.8 pp
2023
5.2%
79.9
3.4%
+1.8 pp
2024
5.5%
88.1
3.8%
+1.7 pp
2025
6.0%
93.5
4.1%
+1.9 pp
2026 (Proj.)
6.3%
95–102
4.2% (est.)
+2.1 pp
2.2 Inflation and Price Stability
Tanzania maintained headline inflation within the Bank of Tanzania's 3–5% target range throughout 2025, averaging 3.3% for the year. However, a critical disparity exists between headline and food inflation. Food prices rose at 6.6% — nearly double the headline rate — disproportionately burdening low-income households where food constitutes 60–80% of total expenditure.
📊 Inflation Disparity Alert
The official headline inflation of 3.4% masks a significantly higher effective inflation rate for the poorest 50% of Tanzanians, estimated at 5.5–6.5%. Food inflation at 6.6% creates a poverty inflation trap — affecting those least able to absorb price increases. This is a key challenge for inclusive growth policy design.
Inflation: Headline vs. Food Prices vs. Effective Rate for Bottom 50% (%)
2022–2025 — Source: Bank of Tanzania, TICGL estimates
Indicator
2023
2024
2025 (Annual Avg)
Jan 2026
Headline Inflation
3.8%
3.5%
3.3%
3.4%
Food Inflation
6.1%
6.4%
6.6%
6.5% (est.)
Core Inflation (ex-food, energy)
2.9%
2.7%
2.5%
2.6%
Effective Inflation — Bottom 50%
5.2%
5.4%
5.5–6.5%
~5.8% (est.)
BoT Policy Rate
5.50%
5.75%
5.75%
5.75% (held)
2.3 Private Sector Credit Growth
Private sector credit expanded at approximately 8–10% in 2025, signalling improved financial intermediation and business confidence. The benchmark interest rate was held at 5.75% in January 2026 to support growth while containing inflation, reflecting the Bank of Tanzania's balanced monetary stance.
03 Sectoral Performance
3. Sectoral Performance — Key Economic Drivers
Tanzania's growth in 2025 was broadly diversified but led by three standout sectors: mining (gold), tourism, and financial services. Agriculture remains the backbone of employment but underperforms growth relative to GDP potential.
Sectoral Growth Rates — Q2 2025 (% YoY)
Source: Tanzania NBS, Bank of Tanzania
3.1 Mining Sector — The Star Performer
The mining sector was the standout performer of 2025, recording the highest growth rate among all sectors at 19% in Q2 2025. Gold exports reached a record $4.7 billion by November 2025, driven by a combination of record-high global gold prices and increased production volumes at major mines including Geita Mine (Barrick) and North Mara Mine.
Gold Export Revenue (USD Billion) & Gold Price Outlook
2021–2026 export revenues + 2026 major bank gold price forecasts — Source: BoT, J.P. Morgan, Morgan Stanley
Mining Metric
Value / Status
Context
Gold Exports (2025)
$4.4–4.7 billion
Record high; up 35.5–42.1% YoY
Gold's Share of Goods Exports
~45–55%
Dominant export commodity
Mining Sector Growth (Q2 2025)
19%
Highest sectoral growth rate
Key Producing Mines
Geita, North Mara, Bulyanhulu
All operational at full capacity
Gold Price Outlook 2026 (JPM)
$4,400–$5,055/oz
Bullish; highs forecast up to ~$5,500
Gov. Gold Holdings Liquidation
$1.2–1.3 billion
Directed to infrastructure funding
💎 Gold Price Tailwind
Major global banks — including J.P. Morgan and Morgan Stanley — project gold averaging $4,400–$5,055/oz in 2026 with potential highs of ~$5,500. This structural tailwind provides Tanzania with a sustained revenue windfall through at least 2027, significantly buffering fiscal and external risks. The government's strategic liquidation of ~$1.2–1.3 billion in gold holdings to fund infrastructure is a prudent measure that unlocks liquidity while maintaining reserve adequacy.
3.2 Tourism Sector — Continued Recovery
The tourism sector continued its post-pandemic recovery, with international arrivals increasing by 11.4% to reach 2.3 million visitors by October 2025. Tourism revenue reached $4.3 billion, briefly surpassing gold as Tanzania's top foreign exchange earner at certain periods during 2025, underlining the sector's growing strategic importance.
Tourism: International Arrivals (Millions) & Revenue (USD Billion)
2019–2025 recovery trajectory — Source: Tanzania Tourism Board, BoT
Tourism Indicator
2023
2024
2025
Change
International Arrivals
1.9M
2.06M
2.3M
+11.4%
Tourism Revenue (USD)
$3.3B
$3.8B
$4.3B
+13.2%
Share of GDP
~4.1%
~4.3%
~4.6%
+0.3 pp
Avg Revenue per Visitor (USD)
$1,737
$1,845
$1,870
+1.4%
⚠ Tourism Risk — US Travel Restrictions
US partial travel restrictions effective January 1, 2026 represent a potential headwind for high-value tourism from North American markets. The US is typically a top-5 source market for Tanzania's luxury safari segment. Proactive diplomatic engagement will be critical to mitigating this risk.
3.3 Agriculture Sector
Agriculture grew at 4.1% in Q2 2025 — below the mining and financial services sectors, but still a meaningful contribution to overall growth. The sector continues to employ over 60% of Tanzania's workforce and accounts for approximately 26% of GDP. Key agricultural exports including tobacco, cashew nuts, and tea showed mixed performance.
Agriculture: GDP Share (%) vs. Employment Share (%)
Highlighting the structural productivity gap — Source: Tanzania NBS, ILO
⚡ Agriculture Productivity Gap
Agriculture employs 60%+ of Tanzania's workforce but contributes only ~26% of GDP — implying dramatically lower productivity per agricultural worker compared to other sectors. This structural imbalance is a root cause of rural wage stagnation and is central to Tanzania's inclusive growth challenge. Vision 2050's target to expand irrigation to 5 million acres is a direct response to this gap.
3.4 Manufacturing Sector — Persistent Weakness
Manufacturing remains a structural weakness in Tanzania's economy. Manufacturing exports declined to $1.31 billion from $1.36 billion in 2025, signalling stagnation despite government emphasis on industrial development. Manufacturing's share of GDP has remained stuck at approximately 8% since the mid-1990s — a 30-year structural failure to diversify.
Sector
Q2 2025 Growth
GDP Share
Employment Share
Trend
Mining & Quarrying
19.0%
~5%
~1%
🚀 Surging
Financial Services
8.5%
~7%
~1%
↑ Growing
Construction
6.8%
~8%
~5%
↑ Growing
Tourism / Trade
6.2%
~9%
~8%
↑ Recovering
Agriculture
4.1%
~26%
>60%
→ Steady
Manufacturing
3.2%
~8%
~4%
↓ Stagnant
ICT / Digital
7.1%
~3%
~2%
↑ Emerging
Sectoral Contribution to GDP Growth
Agriculture (26% GDP)
26%
Trade & Tourism (~9%)
9%
Manufacturing (~8%)
8%
Construction (~8%)
8%
Financial Services (~7%)
7%
Mining (~5%)
5%
ICT / Digital (~3%)
3%
04 External Sector
4. External Sector Performance
Tanzania's external sector showed significant improvement in 2025. The current account deficit narrowed to $2.22 billion (2.4% of GDP) from $2.89 billion in 2024 — a 23.2% improvement — driven by strong export performance in gold and tourism. This improvement reflects both the structural strength of Tanzania's commodity exports and the ongoing post-pandemic recovery of the services sector.
$2.22B
Current Account Deficit 2025
2.4%
of GDP (down from 3.2%)
$6.17B
Forex Reserves (2025)
4.7 mo
Import Cover (EAC min: 4)
+25.2%
Traditional Agri-Exports Growth
Stable
TZS Exchange Rate
Current Account Deficit Trend (USD Billion & % of GDP)
2020–2026 — Source: Bank of Tanzania, IMF
External Indicator
2023
2024
2025
Change YoY
Current Account Deficit (USD B)
$2.61B
$2.89B
$2.22B
▼ –23.2%
Current Account (% of GDP)
3.3%
3.2%
2.4%
▼ –0.8 pp
Foreign Reserves (USD B)
$5.36B
$5.74B
$6.17B
▲ +7.5%
Import Cover (months)
4.2
4.4
4.7
▲ +0.3 mo
Goods Export Growth
+8.4%
+11.2%
+18.5%
▲ Strong
Traditional Agri-Export Growth
+6.1%
+9.3%
+25.2%
▲ Surge
Manufacturing Export Value
$1.42B
$1.36B
$1.31B
▼ –3.7%
Forex Reserves (Jan 2026)
—
—
$6.3B
4.9 months cover
4.1 ODA Decline and Financing Gap
A critical structural vulnerability in Tanzania's external position is the dramatic decline in Official Development Assistance (ODA). ODA to Tanzania has declined approximately 84% since 2013, with further projected drops of 9–17% in 2025–2026. This creates an estimated ~15% budget financing gap, increasing reliance on domestic revenue mobilisation, commercial borrowing, or non-traditional development partners.
ODA Decline vs. Domestic Revenue Growth (Index: 2013 = 100)
Tanzania's shift from aid-dependent to domestically-financed development — Source: OECD, BoT
⚠ Financing Risk — ODA Cliff
ODA declined ~84% from 2013 to 2025, creating a structural financing gap. With further drops of 9–17% projected in 2025–2026, the government's "Sovereign Pragmatism" doctrine — shifting from aid to trade-driven growth — is not merely aspirational but a fiscal necessity. The risk is that the pace of domestic revenue growth lags the pace of aid withdrawal, potentially constraining public investment in social services and infrastructure.
4.2 Exchange Rate and TZS Stability
The Tanzanian shilling maintained relative stability in 2025, supported by strong gold export inflows and tourism revenues. The Bank of Tanzania's foreign reserves buffer of $6.3 billion (4.9 months import cover) as of January 2026 — comfortably above the 4-month EAC prudential minimum — provides meaningful protection against external shocks and TZS depreciation pressures.
05 Infrastructure
5. Infrastructure Development — Key Milestones
The period under review was marked by some of Tanzania's most significant infrastructure achievements in decades, with the completion of multiple flagship projects that will define the country's economic trajectory for years to come.
🏆 Landmark Achievement
Julius Nyerere Hydropower Project Largest Dam in East Africa
Completed and fully operational as of April 2025, the Julius Nyerere Hydropower Project represents Tanzania's most significant infrastructure achievement — built 99.5% from domestic revenues, demonstrating fiscal sovereignty and long-term vision.
2,115 MW
Total Installed Capacity
5,920 GWh
Annual Power Production
TZS 6.5T
Total Cost (~$2.9B)
99.5%
Domestically Financed
#1 EA
Largest in East Africa
#4 Africa
4th Largest Dam in Africa
Tanzania Power Generation Capacity — Before & After Julius Nyerere Dam (MW)
National grid capacity milestone — Source: TANESCO, Ministry of Energy
5.2 Other Major Infrastructure Progress
Project
Status
Strategic Impact
Timeline
Julius Nyerere Hydropower (2,115 MW)
✅ Fully Operational
Energy self-reliance; export potential to Zambia & neighbours
Completed April 2025
Standard Gauge Railway (SGR)
🔄 Under Construction
Connects DSM to Lake Victoria; freight & passenger logistics transformation
Ongoing 2025–2027
Kwala Dry Port
✅ Launched
SGR electric freight services; inland cargo hub
Launched July 2025
Kigongo-Busisi Bridge (JPM Bridge)
✅ Inaugurated
East Africa's longest bridge; Lake Victoria connectivity
Inaugurated June 2025
Dar es Salaam Port Expansion
🔄 Ongoing
Capacity uplift for regional trade hub ambitions
Ongoing
East African Crude Oil Pipeline (EACOP)
🔄 Advanced Stage
$42B LNG project; regional energy export corridor
Expected completion by July 2026
Power Transmission to Zambia
🔄 Under Construction
Electricity export revenue stream for Tanzania
2026–2027
⚡ Energy Transformation Impact
The full operationalisation of the Julius Nyerere Dam is expected to be a game-changer for Tanzania's industrialisation agenda. Reliable, affordable electricity is the single most critical input for manufacturing growth. With national capacity now approximately doubling, Tanzania is positioned to attract industrial investment that was previously deterred by unreliable power supply. The dam also enables potential electricity exports to neighbouring countries, creating a new revenue stream estimated at hundreds of millions of dollars annually.
06 Vision 2050
6. Tanzania Vision 2050 — Strategic Development Framework
In her inaugural address to Parliament on November 14, 2025, President Hassan officially launched Tanzania Vision 2050 — an ambitious long-term national development framework targeting Tanzania's transformation into a high-income, industrialised economy by mid-century. The framework sets a target of a $1 trillion economy and high-income status by 2050.
Tanzania Vision 2050 — Key Targets Progress Tracker
Current baseline vs. 2030 short-term targets — Source: President's Office, TICGL
6.1 Short-Term Targets (By 2030)
Vision 2050 Target (by 2030)
Current Baseline
2030 Target
Required Change
Feasibility
GDP Growth Rate
5.6–6.0%
>7.0%
+1.0–1.4 pp
Challenging
Power Generation Capacity
~4,000 MW
8,000 MW
Double (+4,000 MW)
On Track
Irrigated Land
~0.7M acres
5 million acres
+7× expansion
Ambitious
Manufacturing GDP Growth
~4.8%
9% annually
Nearly double
Requires structural reform
New Jobs Created
~53,000 (100 days)
8 million total
Sustained creation
Challenging
Total Investment Attraction
~$8–10B annual FDI
$50 billion total
Scaled attraction strategy
Moderate feasibility
6.2 Medium-to-Long Term Milestones (2031–2050)
2027–2030: GDP Growth 6.5%
6.5%
2030: Poverty Rate Target 41%
41%
2030: Debt/GDP Stabilise at 50–52%
52%
2030: Manufacturing share of GDP 9%
9%
2026: GDP USD 95–102 billion
~$98B
🎯 Sovereign Pragmatism Doctrine
The administration unveiled a "Sovereign Pragmatism" doctrine — a deliberate strategic pivot shifting Tanzania's development model from aid-dependency to trade-driven growth and value-added investments. This is reflected in new partnerships including strengthened Russia-Tanzania economic ties, diversified FDI sources, and prioritisation of domestic resource mobilisation. The doctrine is a direct response to the structural 84% decline in ODA since 2013.
07 Fiscal Position
7. Fiscal Position and Public Debt
Tanzania's fiscal position remains relatively healthy. Public debt stood at 49.6% of GDP in 2025 — among the lowest in the East African region and significantly below the IMF's 55% sustainability threshold. The present value (PV) of debt was estimated at 40.6% of GDP, well within safe parameters. Debt is projected to decline to 48.3% of GDP by 2026, reflecting a controlled trajectory.
Public Debt as % of GDP — Tanzania vs. EAC Peers (2025)
Tanzania maintains one of the lowest debt ratios in East Africa — Source: IMF, World Bank
Fiscal Indicator
2023
2024
2025
2026 (Proj.)
Public Debt (% of GDP)
51.2%
50.4%
49.6%
48.3%
PV of Debt (% of GDP)
43.1%
41.8%
40.6%
~39.5%
Fiscal Deficit (% of GDP)
–3.6%
–3.4%
–3.2%
–3.0%
Tax Revenue (% of GDP)
12.4%
12.8%
13.1%
Target: 13.3%
Domestic Revenue (% of GDP)
15.1%
15.6%
15.9%
Target: 16.7%
Debt Service (TZS Trillion/yr)
9.8T
10.6T
11.5T
Rising ↑
Debt Service (% Gov't Revenue)
18%
21%
20–25%
26–30% by 2028
External Debt Service/Revenue
28.4%
31.3%
~30%
~24% (proj.)
Debt Service Burden (% of Government Revenue) — 2020–2028 Projection
While Tanzania's overall debt level is manageable, the debt service burden is rising. Annual debt service of ~TZS 11.5 trillion (20–25% of government revenue in 2025) is projected to rise toward 26–30% by 2028 — approaching levels that constrain fiscal space for social spending. The IMF/DSA assesses overall debt at low-to-moderate distress risk, but sustained revenue mobilisation above the current 13.1% tax-to-GDP ratio is essential to prevent fiscal tightening.
7.1 Revenue Mobilisation Challenge
Tanzania's tax-to-GDP ratio of approximately 13.1% remains significantly below the optimal 17–20% range recommended for sustainable development financing. Government revenues at approximately 15% of GDP limit the capacity to fund social programmes and infrastructure without increasing external borrowing. The 2025/26 budget targets domestic revenue of 16.7% of GDP and tax revenue of 13.3% — modest but directionally correct improvements.
Tax Revenue as % of GDP — Tanzania vs. Optimal Range
Tanzania significantly lags the 17–20% optimal for development financing — Source: IMF, OECD
08 Key Challenges
8. Key Economic Challenges
Despite strong headline growth metrics, Tanzania faces four structural and cyclical challenges that must be addressed to achieve Vision 2050's targets and ensure that economic growth translates into broadly shared prosperity.
🔴 Critical Challenge
Inclusive Growth Gap
GDP grew 37.5% nominally (2020–2025), but urban wages rose only 5.3% and rural wages just 4.9% — effectively stagnant in real terms. The poorest 50% face an effective inflation rate of 5.5–6.5%, not the headline 3.4%.
🔴 Critical Challenge
Revenue Mobilisation
Tax-to-GDP ratio of 13.1% is far below the 17–20% optimal range. This severely constrains public investment without risking unsustainable borrowing levels.
🟡 Significant Risk
Political Uncertainty
Contested election, US travel restrictions (Jan 2026), international criticism from AU/EU/SADC, and potential FDI confidence effects. Reconciliation commission progress is crucial.
🟡 Significant Risk
Manufacturing Stagnation
Manufacturing exports declined to $1.31B from $1.36B. GDP share stuck at ~8% since mid-1990s — 30 years of industrial under-development despite policy rhetoric.
🟡 Significant Risk
ODA Withdrawal
84% decline in ODA since 2013; further 9–17% drops projected. Creates ~15% budget financing gap. Shifts pressure to domestic revenue — which is not yet adequate.
🟢 Moderate / Manageable
Geopolitical & Climate Shocks
Red Sea shipping disruptions, global trade tensions, erratic rainfall risks for agriculture and hydropower. Buffered by strong reserves and diversified exports.
8.1 The Inclusive Growth Paradox
The most profound challenge Tanzania faces is the disconnect between strong macroeconomic performance and lived economic reality for ordinary Tanzanians. GDP grew 37.5% in nominal terms from 2020 to 2025. Yet urban wages rose only 5.3% and rural wages 4.9% over the same period. After adjusting for inflation, real wage growth is essentially zero — meaning that most Tanzanians have not materially benefited from Tanzania's "economic success story."
GDP Growth vs. Wage Growth vs. Effective Inflation (2020–2025, cumulative %)
The inclusive growth gap — Source: Tanzania NBS, ILO, TICGL estimates
Inclusive Growth Indicator
2020
2022
2025
5-Yr Change
Nominal GDP Growth (cumulative)
Base
+14%
+37.5%
+37.5%
Urban Wage Growth (nominal)
Base
+2.1%
+5.3%
+5.3% only
Rural Wage Growth (nominal)
Base
+1.8%
+4.9%
+4.9% only
Headline Inflation (cumulative)
Base
+8.6%
~+18%
Erodes wages
Real Urban Wage Growth
Base
–6.5%
~–12%
Negative
Real Rural Wage Growth
Base
–6.8%
~–13%
Negative
Food Inflation (avg annual)
—
7.5%
6.6%
Persistent ↑
Poverty Rate (% population)
~44%
~43%
~42%
Slow decline
📊 The Inclusive Growth Crisis
Tanzania's GDP-wage divergence is among the most severe in Sub-Saharan Africa. A nominal GDP expansion of +37.5% alongside nominal wage growth of only +5.3% urban / +4.9% rural implies that the productivity gains from Tanzania's economic growth are not being captured by workers. The gains flow disproportionately to capital owners, particularly in the mining sector where foreign companies dominate. Unless targeted inclusive growth policies are implemented, poverty reduction will remain frustratingly slow despite impressive headline growth.
09 Economic Outlook
9. Economic Outlook for 2026 and Beyond
Tanzania's economic prospects for 2026 and the medium term remain robustly positive, underpinned by strong fundamentals and major infrastructure investments now coming online. The IMF projects 6.3% real GDP growth in 2026, with sustained growth of 6.3–6.5% through 2028. Tanzania is expected to remain one of Sub-Saharan Africa's fastest-growing economies.
Tanzania GDP Growth Projections 2026–2030 — Multi-Scenario
Optimistic, Base, and Downside scenarios — Source: IMF, TICGL projections
Indicator
2026 (Base)
2027
2028
2030 (Vision)
Real GDP Growth (%)
6.0–6.3%
6.3–6.5%
6.3–6.5%
>7.0% target
GDP (USD Billion)
$95–102B
~$107B
~$114B
~$140B+
Mainland GDP Growth
6.1%
~6.3%
~6.3%
7%+ target
Zanzibar GDP Growth
7.2%
~7.0%
~6.8%
8%+ target
Inflation
3.5–4.0%
~3.5%
~3.5%
<5% target
Forex Reserves (USD B)
$6.5B (proj.)
~$6.8B
~$7.1B
$8B+ target
Debt/GDP
48.3%
~47%
~46%
50–52% ceiling
Poverty Rate (%)
~41%
~41% (target)
~39%
<35% target
9.1 Key Growth Drivers for 2026
✅ Growth Driver
Julius Nyerere Dam
Full operationalisation providing reliable, affordable electricity — unlocking industrial investment and manufacturing competitiveness across Tanzania.
✅ Growth Driver
Gold Price Tailwind
Major banks forecast gold averaging $4,400–$5,055/oz in 2026 (highs up to $5,500). Sustained FX inflows, reserve accumulation, and fiscal windfall expected.
✅ Growth Driver
Tourism Recovery
International arrivals and revenue momentum continuing into 2026. Sector diversification reducing dependence on single commodity exports.
✅ Growth Driver
LNG Project ($42B)
Negotiations in advanced stages. Finalisation would be transformative — among Africa's largest energy investments and a major new export revenue stream.
✅ Growth Driver
Critical Minerals
Tanzania's nickel, graphite, and lithium deposits attracting global investment interest amid green energy transition. Emerging diversification opportunity.
✅ Growth Driver
SGR & Infrastructure
SGR completion enhancing trade logistics, reducing transport costs, and improving Tanzania's position as a regional transit hub for landlocked neighbours.
TICGL's analysis identifies five immediate priorities for 2026 and five medium-term actions for 2026–2030, drawn directly from the data evidence in this report. These recommendations prioritise inclusive growth, fiscal sustainability, and structural economic transformation.
10.1 Immediate Priorities (2026)
#
Recommendation
Target Metric
Responsible Body
1
Political Reconciliation — Accelerate enquiry & reconciliation commissions to restore domestic stability and international confidence
Lift US travel restrictions; restore bilateral ODA
President's Office
2
Revenue Enhancement — Increase tax-to-GDP ratio from 13.1% to at least 15% via base broadening and improved TRA collection efficiency
Tax/GDP: 13.1% → 15%
Ministry of Finance / TRA
3
Inclusive Growth Mechanisms — Targeted wage support, rural productivity programmes, and social protection for bottom 50%
Rural wage growth >5% real; poverty rate <40% by 2027
Ministry of Labour, PMORALG
4
Manufacturing Support — Concrete incentives (tax holidays, industrial land, infrastructure) to revive manufacturing exports and achieve 9% growth
Mfg exports >$1.5B; GDP share 8% → 10%
Ministry of Trade & Industries
5
Food Security — Strategic reserves, improved distribution, and agri-productivity enhancements to reduce food inflation from 6.6%
Food inflation below 5% by end-2026
Ministry of Agriculture
10.2 Medium-Term Actions (2026–2030)
#
Action
Target
Investment Required
1
Energy Infrastructure — Execute plan to double power generation from 4,000 MW to 8,000 MW; develop electricity export corridor to Zambia and regional markets
8,000 MW by 2030
$3–5B (mixed public/private)
2
District Industrial Parks — Establish manufacturing zones in all regions to promote value-addition, local employment, and agro-processing
Mfg GDP share 9% by 2030
TZS 2–3 trillion
3
LNG Development — Finalise the $42 billion LNG project through negotiated terms that maximise local content, tax revenues, and national benefit
FID decision by 2026; first gas 2031+
$42B (international IOCs)
4
Human Capital Investment — Education, TVET, and skills training reforms aligned to industrialisation, digital economy, and technology adoption needs
Technical graduate output +50% by 2030
Reprioritise education budget
5
Social Protection Expansion — Expand cash transfer and insurance schemes from current <10% coverage to 25% of poor households by 2030
<10% → 25% coverage
~1.5% additional GDP expenditure
11 Conclusion
11. Conclusion — Resilience, Paradox, and the Path Forward
The first 100 days of President Samia Suluhu Hassan's second term present a paradox of economic resilience amidst political turbulence. Tanzania's economy has demonstrated strong fundamentals: 6.0% GDP growth, record gold exports of $4.7 billion, robust tourism recovery generating $4.3 billion, and the successful completion of the Julius Nyerere Hydropower Project — the largest dam in East Africa. Inflation remains controlled at 3.3%, foreign reserves are at a comfortable 4.9 months import cover, and public debt trajectory is declining.
However, these macroeconomic achievements are overshadowed by three critical challenges. First, the contested October 2025 election and subsequent unrest have damaged Tanzania's international reputation and raised legitimate concerns about democratic governance. Second, and most critically for long-term development, economic growth has not translated into improved living standards for most Tanzanians — with real wages essentially stagnant while GDP expanded 37.5%. Third, structural vulnerabilities in revenue mobilisation and manufacturing diversification remain unresolved despite years of policy attention.
📋 TICGL Net Assessment
Three Critical Success Factors for Tanzania 2026–2050
🤝
Political Reconciliation
Restore investor and international confidence through credible democratic reform and transparent accountability processes.
💰
Revenue Mobilisation
Increase tax-to-GDP from 13.1% toward 17–20% to fund development sustainably without reliance on unsustainable external borrowing.
🏘
Inclusive Growth
Ensure GDP growth translates to real wage increases, food security, and expanded social protection for all Tanzanians — not just headline statistics.
Looking ahead to 2026 and beyond, Tanzania's economic prospects remain positive, with the IMF projecting 6.3% growth. The Julius Nyerere Dam, advancing LNG negotiations, continued infrastructure development, and strong commodity exports provide solid foundations. The Vision 2050 framework sets ambitious targets including a $1 trillion economy and high-income status by 2050 — achievable if Tanzania successfully navigates its current political challenges, accelerates revenue mobilisation, and implements genuinely inclusive growth policies.
The completion of the Julius Nyerere Hydropower Project stands as tangible evidence of what Tanzania can achieve through domestic resource mobilisation and long-term vision. The challenge now is to apply this same determination and strategic focus to ensuring that economic growth creates opportunities and improves lives across all segments of Tanzanian society. With the right policies, the 2020s could be the decade in which Tanzania's economic story becomes one that is felt not just in statistics — but in the daily lives of its 65 million people.
📚 Data Sources & Methodology
This analysis draws on data from the Bank of Tanzania (BoT) monetary and financial stability reports, IMF Article IV consultations and World Economic Outlook projections, World Bank Tanzania economic updates, Tanzania National Bureau of Statistics (NBS) quarterly GDP and inflation releases, and research from J.P. Morgan, Morgan Stanley, and other international institutions. Report prepared: February 10, 2026. Analysis by TICGL Research Team.
🔗 Related Research
Explore More TICGL Economic Research
Deepen your understanding of Tanzania's economy with these related analyses and tools from the TICGL research team.
This analysis was produced by TICGL's senior research leadership, combining decades of economic expertise in Tanzania and East Africa.
BK
Chief Economist & Research Director
Dr. Bravious Felix Kahyoza
PhDFMVA®CP3PPCMC
Qualifications
▸ Doctor of Philosophy (PhD) — Economics
▸ Financial Modelling & Valuation Analyst (FMVA®)
▸ Certified PPP Professional (CP3P)
▸ Professional Certificate in Media & Communication (PCMC)
Dr. Kahyoza leads TICGL's economic research division, specialising in macroeconomic policy analysis, public-private partnerships, and Tanzania's development finance landscape. As Chief Economist, he oversees all quantitative modelling, policy advisory work, and the organisation's flagship research publications.
AB
Senior Economist & Research Lead
Amran Bhuzohera
Senior EconomistResearch LeadTICGL
Areas of Expertise
▸ Macroeconomic Research & Data Analysis
▸ Tanzania Sectoral Performance & Trade Economics
▸ East African Investment Climate Assessment
▸ Development Finance & Fiscal Policy
Amran Bhuzohera serves as TICGL's Senior Economist and Research Lead, driving the organisation's quantitative and qualitative economic research programmes. He leads data collection, sectoral analysis, and contributes core findings to TICGL's policy briefs and economic intelligence reports for Tanzania and East Africa.
TICGL
Tanzania Investment and Consultant Group Ltd (TICGL)
East Africa's leading economic research and investment consultancy — providing data-driven intelligence since 2018. ticgl.com
Published: February 10, 2026
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Understanding the Drivers Behind Price Movements
Based on the Rebased National Consumer Price Index (NCPI) data, Tanzania maintained a relatively stable inflation environment throughout 2025, with headline inflation averaging around 3.3% year-on-year between January and November, well within the Bank of Tanzania’s 3–5% target range.
The overall All Items Index rose moderately from 116.87 in December 2024 to 120.01 in December 2025, reflecting a cumulative annual increase of roughly 2.7%. Price changes were mainly driven by fluctuations in food, energy, and transport—particularly seasonal movements in food crops and global fuel price volatility—while core inflation remained subdued at an average of 2.2%, indicating limited underlying pressure on services and non-food items. Despite external shocks, stable fiscal measures and improvements in agricultural production helped keep inflation contained, setting a steady foundation for the country’s 2026 economic outlook.
The inflation measure here is the y-o-y percentage change in the NCPI, which tracks price changes for a basket of goods and services weighted by urban and rural consumption patterns (base period: 2017/18 weights, updated to 2020 prices). The data covers urban prices but reflects national scope. Overall, inflation hovered between 3.1% and 3.5%, influenced primarily by food prices and energy costs, while core inflation (excluding volatile food and energy) trended slightly lower, signaling underlying price stability. Read More:What's Next for Tanzania's Economy? Inflation Dynamics and Political Risks in the Lead-Up to 2026
Evolution of Inflation in 2025: How Price Increases Unfolded
Inflation in 2025 showed a gradual upward creep in the first half of the year, peaking in October before easing slightly in November. This pattern was driven by seasonal factors (e.g., food supply disruptions) and external pressures (e.g., global energy prices), but moderated by steady monetary policy and improved agricultural output in later months.
Monthly Headline Inflation Rates (y-o-y)
Monthly inflation rates for "All Items" (overall consumer basket):
Index at 120.01 suggests ~3.4% y-o-y, based on trend.
First Half (Jan–Jun): Inflation rose modestly from 3.1% to 3.3%, averaging 3.2%. This was largely due to a 1.2% cumulative increase in the Food and Non-Alcoholic Beverages index (weight: 28.2%), which jumped from 124.27 to 130.60. Factors included supply chain issues from weather variability and higher import costs for staples like maize and rice. Non-food items, such as Housing (up 3.3% cumulatively) and Transport (up 1.0%), provided some offset but couldn't fully counter food's dominance.
Second Half (Jul–Dec): Inflation edged higher to an average of 3.4%, peaking at 3.5% in October before stabilizing. The Non-Core Index (volatile items like unprocessed food and energy, weight: 26.1%) surged from 131.23 in June to 129.21 by December, contributing ~0.5 percentage points to headline inflation. Key drivers:
Food Crops and Related Items (weight: 11.0%): Inflation flipped from deflation (-3.0% in Jan) to positive 6.6% by November, driven by erratic rainfall and post-flood recovery in key growing regions like Morogoro and Mbeya.
Energy, Fuel, and Utilities (weight: 5.7%): Rose from 125.25 to 129.33, with spikes in April–June (up to 7.9% y-o-y) due to global oil price volatility and domestic LPG/diesel adjustments.
Transport (weight: 14.1%): Contributed significantly in Q4, with the index hitting 121.50 in December (up 2.6% from Dec 2024), linked to fuel pass-through effects.
Core vs. Non-Core Breakdown: Core inflation (excluding food and energy, weight: 73.9%) was more subdued, averaging 2.2% and declining from 2.9% in January to 2.3% in December. This indicates that base pressures were contained, thanks to stable services (e.g., Education at ~4.0%, but low weight) and financial services. Non-core items, however, were volatile, averaging 6.3% and peaking at 7.3% in October–November, underscoring the role of external shocks.
Overall, goods (weight: 62.8%) drove 70% of the inflation variance, with a 3.3% average rise, while services (weight: 37.2%) grew more slowly at 1.2%, reflecting better wage growth and public spending controls.
What to Expect for the Rest of 2025 and Beyond
With December 2025 data showing the All Items Index at 120.01 (implying ~3.4% y-o-y inflation), the full-year average is likely to settle at 3.3–3.4%—within the Bank of Tanzania's (BoT) target range of 3–5% and lower than the 3.8% average in 2024. This resilience stems from strong agricultural recovery (e.g., maize production up ~5% y-o-y per early NBS estimates) and prudent fiscal policy.
Key Expectations and Risks:
Positive Outlook (Base Case): Inflation could ease to 3.2–3.3% by year-end if harvests exceed expectations and global commodity prices stabilize. Core inflation may dip below 2.0%, supporting BoT's potential rate cuts to boost growth (projected at 6.0–6.5% GDP in 2025).
Upside Risks (Potential Pressures):
Food (High Probability): If El Niño-like weather persists into early 2026, unprocessed food inflation could rebound to 8–9%, pushing headline to 3.6–4.0%. Monitor crop yields in the 2025/26 Msimu season.
Energy (Medium Probability): Geopolitical tensions (e.g., Middle East) could lift fuel prices, adding 0.5–1.0 pp to inflation via transport pass-through.
External Factors: Currency depreciation (TZS/USD) or import tariffs on essentials could amplify non-core volatility.
Downside Mitigants: Government subsidies on fertilizers and fuel, plus improved irrigation, should cap food spikes. Services inflation remains anchored, with education and health showing minimal variance.
What to Expect for 2026: Stability Amid Headwinds
For 2026, consensus forecasts point to inflation holding steady at 3.2–3.5% y-o-y, a slight uptick from 2025's average but still within BoT's target band. This reflects robust GDP growth projections (5.9–6.1%), bolstered by fixed investments in infrastructure and mining, alongside agricultural recovery. The IMF anticipates end-period consumer price inflation at ~3.2%, while Statista projects an annual average of 3.54%. Fitch Ratings describes a "neutral" regional outlook for Sub-Saharan Africa, with moderate inflation supported by stable commodity prices and fiscal discipline.
Key expectations include:
Base Case (Price Stability): Inflation eases to 3.2–3.3% if food production rebounds (e.g., via improved irrigation and fertilizer subsidies) and global energy prices remain contained. Non-core volatility (e.g., unprocessed food) could subside to 5–6%, with core holding below 2.5%. A stable Tanzanian shilling (TZS) would curb imported inflation, sustaining private credit growth at ~12% y-o-y.
Upside Risks: Drought risks in Eastern Africa could push regional food inflation to 4.5%, adding ~0.5–1.0 pp to Tanzania's headline rate (given food's 28.2% CPI weight). Currency pressures or supply disruptions might elevate energy costs, mirroring 2025's Q2 spikes.
Role of Political Stability in 2026 Price Dynamics
The continued improvement in Tanzania's political situation into 2026 could indeed further promote price stability or controlled inflation, as suggested. A calmer post-election environment would enhance investor confidence, stabilize the shilling, and support supply chains—key to dampening imported and food price pressures. For instance, resolved tensions could accelerate foreign direct investment (FDI) inflows, projected to rise 10–15% in 2026, indirectly easing inflationary bottlenecks in transport and utilities.
However, recent developments following the October 2025 general elections introduce caveats. The polls, which saw President Samia Suluhu Hassan's re-election, were marred by violence, protester killings, and a post-election crackdown that drew rare criticism from the African Union (AU) for undermining democratic norms. This has battered Tanzania's global image—once a beacon of East African stability—leading to postponed regional court hearings, financier pullbacks, and economic ripple effects like tightened credit. Analysts warn of a "descent into repression" that could prolong uncertainty, potentially adding 0.5–1.0 pp to inflation via risk premiums on imports and reduced FDI.
That said, if President Hassan's administration pivots toward reconciliation—as hinted in her November 2025 admissions of a "battered" image—and implements AU-recommended reforms, this could foster the improvement needed for 2026 stability. Historical precedents (e.g., post-2021 transition) show her leadership's potential for calm navigation, which could restore confidence and align with BoT's projection of inflation firmly within 3–5%. Monitoring planned December 9 protests and their outcomes will be crucial; peaceful resolutions could signal the positive trajectory you referenced, ultimately contributing to lower mfumuko wa bei (inflation) through enhanced economic predictability.
In summary, 2025's controlled inflation sets a solid foundation, with 2026 likely to see similar stability (3.2–3.5%) if political headwinds ease. Political improvements would amplify this by bolstering growth-enabling factors, but near-term risks from the election aftermath warrant vigilance. For the latest, refer to BoT's quarterly reports or NBS updates. If you'd like charts on projected vs. actual trends or focus on specific sectors, just say the word!
SUMMARY OF REBASED NATIONAL CONSUMER PRICE INDEX (NCPI), SCOPE: (WEIGHT: URBAN AND RURAL); (PRICES: URBAN); CLASSIFICATION: (UN COICOP, 2018) WEIGHT REFERENCE PERIOD: (2017/18; PRICE UPDATED TO YEAR 2020)
S/N
MAJOR GROUPS
Weights
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-25
INFLATION RATE
3.1
3.1
3.2
3.3
3.2
3.2
3.3
3.3
3.4
3.4
3.5
3.4
ALL ITEMS INDEX
100.00
116.87
117.57
118.28
119.27
119.78
119.85
120.18
119.85
119.77
119.86
119.63
120.01
1
Food and Non-Alcoholic Beverages
28.2
124.27
125.77
127.30
129.75
130.62
130.60
131.53
130.47
130.48
129.70
129.47
129.98
2
Alcoholic Beverages and Tobacco
1.9
110.33
111.83
111.97
112.05
112.14
112.28
112.39
112.50
112.90
113.60
113.56
113.67
3
Clothing and Footwear
10.8
113.17
114.04
114.23
114.49
114.51
114.71
114.88
114.89
114.77
115.09
115.17
115.26
4
Housing, Water, Electricity, Gas and Other Fuels
15.1
115.59
115.83
116.93
117.97
118.90
119.08
119.30
118.77
118.10
118.48
117.89
117.70
5
Furnishings, Household Equipment and Routine Household Maintenance
7.9
114.38
114.72
114.82
115.13
115.35
115.55
115.61
116.31
116.32
116.99
117.32
117.61
6
Health
2.5
108.43
108.75
108.95
109.13
109.31
109.53
109.56
109.63
109.55
109.60
109.64
109.70
7
Transport
14.1
118.37
118.40
118.78
119.25
119.73
119.59
119.65
119.59
119.69
120.78
119.96
121.50
8
Information and Communication
5.4
106.16
106.01
106.05
106.13
106.17
106.22
106.25
106.25
106.32
106.31
106.44
106.49
9
Recreation, Sport and Culture
1.6
110.54
110.82
110.97
110.97
111.13
111.19
111.11
110.98
111.19
111.10
111.15
110.89
10
Education Services
2.0
108.84
111.97
112.16
112.16
112.16
112.16
112.16
112.16
111.99
111.99
112.00
112.01
11
Restaurants and Accomodation Services
6.6
116.39
116.54
116.58
116.67
117.08
117.27
117.31
117.35
117.29
117.39
117.37
117.49
12
Insurance and Financial Services
2.1
101.92
101.92
102.14
102.29
102.46
102.43
102.42
102.39
102.36
102.34
102.33
102.27
13
Personal Care, Social Protection and Miscellaneous Goods and Services
2.1
116.64
117.67
117.76
117.97
118.05
118.07
118.11
118.14
118.36
118.30
118.09
118.40
Other Selected Groups
Weights
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sept-25
Oct-25
Nov-25
Dec-25
1
Core Index
73.9
114.45
114.97
115.22
115.45
115.66
115.84
115.84
115.93
115.98
116.36
116.22
116.77
2
Non-Core Index
26.1
123.73
124.98
126.95
130.12
131.47
131.23
132.49
130.98
130.51
129.81
129.31
129.21
3
Unprocessed Food Index
20.4
123.31
124.93
126.66
129.71
130.75
130.42
131.96
130.53
130.45
129.24
129.12
129.17
4
All Items Less Unprocessed Food Index
79.6
115.22
115.69
116.13
116.60
116.97
117.14
117.16
117.12
117.03
117.46
117.20
117.66
5
Food Crops and Related Items Index
11.0
117.30
118.88
121.54
124.24
126.26
125.36
125.74
124.47
123.82
122.94
122.45
121.59
6
Energy, Fuel and Utilities Index
5.7
125.25
125.14
127.98
131.58
134.05
134.11
134.38
132.57
130.72
131.86
130.01
129.33
7
Services Index
37.2
111.81
112.12
112.19
112.29
112.54
112.59
112.64
112.70
112.69
113.16
112.81
113.49
8
Goods Index
62.8
119.86
120.81
121.88
123.41
124.07
124.14
124.64
124.09
123.96
123.83
123.67
123.87
9
Education services and products ancillary to education Index
4.1
111.82
114.11
114.32
114.39
114.37
114.40
114.40
114.34
114.32
114.40
114.22
114.31
10
Food and Non-Alcoholic Beverages
28.2
124.27
125.77
127.30
129.75
130.62
130.60
131.53
130.47
130.48
129.70
129.47
129.98
11
All items Less Food and Non-Alcoholic Beverages
71.8
113.96
114.36
114.74
115.15
115.53
115.63
115.72
115.69
115.56
116.00
115.77
116.09
INFLATION RATES
1
Core Index
73.9
2.9
2.7
2.5
2.2
2.2
2.1
1.9
1.9
2.0
2.2
2.1
2.3
2
Non-Core Index
26.1
3.3
4.0
5.0
6.0
5.7
5.6
7.1
7.1
7.3
6.7
7.3
6.2
3
Unprocessed Food Index
20.4
2.8
4.1
4.9
5.5
5.2
5.5
8.6
8.9
8.8
7.6
8.3
7.0
4
All Items Less Unprocessed Food Index
79.6
3.1
2.8
2.7
2.6
2.6
2.4
1.9
1.8
2.0
2.3
2.3
2.5
5
Food Crops and Related Items Index
11.0
-3.0
-1.5
-1.2
-1.7
-0.9
-1.7
1.7
3.5
4.6
4.9
6.6
5.4
6
Energy, Fuel and Utilities Index
5.7
5.3
3.5
5.4
7.9
7.3
6.1
2.1
1.0
2.6
3.7
4.0
3.8
7
Services Index
37.3
1.6
1.0
1.4
1.0
1.1
1.0
0.9
0.8
0.8
1.3
1.0
1.6
8
Goods Index
62.7
3.8
4.2
4.2
4.5
4.3
4.2
4.7
4.7
4.9
4.7
5.0
4.4
9
Education services and products ancillary to education Index
4.0
2.9
4.0
4.0
4.0
3.8
3.2
2.9
2.8
2.8
2.5
2.6
2.4
10
Food and Non-Alcoholic Beverages
28.2
4.6
5.3
5.0
5.4
5.3
5.6
7.3
7.6
7.7
7.0
7.4
6.6
11
All items Less Food and Non-Alcoholic Beverages
71.8
2.5
2.1
2.4
2.3
2.3
2.1
1.7
1.5
1.6
1.9
1.9
2.1
In April 2025, the Tanzania Shilling (TZS) exhibited a moderate depreciation trend, with the average exchange rate reaching TZS 2,684.41/USD, a 3.9% annual decline from ~TZS 2,583/USD in April 2024 and a 1.3% monthly drop from TZS 2,650.24/USD in March 2025. The Interbank Foreign Exchange Market (IFEM) saw reduced activity, with transactions falling to USD 12.9 million from USD 70.1 million in March 2025, supported by a Bank of Tanzania intervention selling USD 6.25 million. Bolstered by USD 5.3 billion in reserves covering 4.3 months of imports, the TZS maintained controlled stability.
1. Exchange Rate Movement
The Tanzania Shilling (TZS) experienced a gradual depreciation against the US dollar (USD) over the past year, reflecting pressures from external and domestic factors.
Key Figures:
April 2025 Average Exchange Rate: TZS 2,684.41/USD
March 2025 Average Exchange Rate: TZS 2,650.24/USD
April 2024 Average Exchange Rate: ~TZS 2,583/USD (implied from annual comparison)
Annual Depreciation (April 2024 to April 2025): 2,684.41−2,5832,583×100%≈3.9%\frac{2,684.41 - 2,583}{2,583} \times 100\% \approx 3.9\%2,5832,684.41−2,583×100%≈3.9%
Monthly Depreciation (March 2025 to April 2025): 2,684.41−2,650.242,650.24×100%≈1.3%\frac{2,684.41 - 2,650.24}{2,650.24} \times 100\% \approx 1.3\%2,650.242,684.41−2,650.24×100%≈1.3%
Analysis:
Annual Trend: The 3.9% depreciation over the year (from ~TZS 2,583/USD to TZS 2,684.41/USD) indicates a moderate weakening of the TZS, driven by structural and seasonal factors. The Monthey Economic Review highlights global economic uncertainties, such as a 10% US tariff on imports and a projected global growth slowdown to 2.8% in 2025, which may have reduced foreign exchange inflows to Tanzania, contributing to this trend.
Monthly Trend: The 1.3% depreciation from March to April 2025 reflects a continuation of the gradual weakening, likely due to short-term imbalances in foreign exchange supply and demand. The document’s mention of stable monetary policy (CBR at 6%) aimed at smoothing exchange rate volatility suggests that the Bank of Tanzania (BoT) is actively managing these pressures to prevent sharp declines.
Context from Document: The document does not explicitly provide exchange rate data but notes that the BoT’s monetary policy objectives include maintaining price stability and smoothing exchange rate volatility. The moderate inflation rate of 3.2% in April 2025 suggests that the depreciation has not significantly fueled domestic price pressures, indicating effective central bank management.
Implications:
The gradual 3.9% annual depreciation suggests controlled currency instability rather than a crisis, as the TZS remains within manageable bounds. This aligns with the document’s emphasis on the BoT’s data-dependent monetary policy adjustments to support economic stability.
2. Interbank Foreign Exchange Market (IFEM)
The IFEM is where banks trade foreign currencies, and its activity provides insight into exchange rate dynamics and liquidity in the foreign exchange market.
Key Figures:
Total IFEM Transactions in April 2025: USD 12.9 million
Down from USD 70.1 million in March 2025 (an 81.6% decrease, calculated as [(70.1 - 12.9) / 70.1] × 100).
Down from USD 72 million in April 2024 (an 82.1% decrease, calculated as [(72 - 12.9) / 72] × 100).
BoT Intervention: Sold USD 6.25 million in April 2025 to support import demand and stabilize the TZS.
Analysis:
Decline in Transaction Volume: The sharp drop in IFEM transactions to USD 12.9 million in April 2025 from USD 70.1 million in March 2025 and USD 72 million in April 2024 suggests reduced foreign exchange market activity. This could reflect lower foreign currency inflows, possibly due to seasonal declines in cash crop exports (noted as a driver of depreciation).
BoT Intervention: The sale of USD 6.25 million by the BoT represents a significant portion of the April IFEM volume (48.4%, calculated as 6.25 / 12.9 × 100). This intervention aimed to meet import demand and curb TZS depreciation, aligning with the document’s mention of gross official reserves being used to regulate balance of payments imbalances through foreign exchange market interventions.
Reserves Context: The provided information notes that Tanzania’s gross official reserves stood at USD 5.3 billion, covering 4.3 months of imports. The document defines gross official reserves as external assets available for balance of payments financing and interventions, indicating that the BoT has sufficient capacity to support the TZS, as evidenced by the USD 6.25 million sale.
Implications:
The low IFEM transaction volume suggests constrained foreign exchange liquidity, but the BoT’s intervention and healthy reserves (USD 5.3 billion) demonstrate proactive management to stabilize the TZS. The document’s reference to the BoT’s role in managing exchange rate volatility supports this, ensuring that depreciation remains gradual.
3. Drivers of Depreciation
The provided information identifies key factors contributing to the TZS’s depreciation, which can be contextualized with the document’s insights.
Key Drivers:
Lower Seasonal Foreign Exchange Inflows: Reduced inflows from cash crop exports (e.g., coffee, tea) likely contributed to the TZS’s weakening. The document notes rising tea prices (8.2%) but declining coffee prices due to improved production forecasts, suggesting mixed export performance that may have limited foreign currency earnings.
Higher Import Demand: Increased demand for imports, relative to foreign exchange supply, exerted pressure on the TZS. The document mentions subdued crude oil demand and a 6.7% price decrease, but high import needs for other goods (e.g., food or industrial inputs) likely outstripped supply, necessitating BoT intervention.
Modest Central Bank Support: The BoT’s sale of USD 6.25 million in the IFEM reflects targeted intervention to balance supply and demand, consistent with the document’s description of monetary policy smoothing exchange rate volatility.
Analysis:
Seasonal Export Trends: The document’s mention of agricultural commodity price movements and the National Food Reserve Agency’s efforts to stabilize food supply suggest that seasonal agricultural cycles impact foreign exchange inflows. Lower cash crop exports in April 2025 likely reduced USD inflows, contributing to the 3.9% annual depreciation.
Import Pressures: The document does not provide specific import data, but the BoT’s intervention to support import demand indicates a supply-demand imbalance. The moderate inflation rate (3.2%) suggests that import-driven price pressures were contained, possibly due to BoT actions.
BoT’s Role: The document’s monetary policy framework emphasizes maintaining a 5% inflation target and supporting growth, with the CBR at 6%. The USD 6.25 million intervention reflects a cautious approach, leveraging reserves to prevent sharp TZS declines.
4. Shilling Stability Summary
The provided summary table encapsulates the TZS’s performance:
Month
Avg. Exchange Rate (TZS/USD)
Monthly Change
Annual Change
April 2024
~2,583
—
—
March 2025
2,650.24
—
↑ 2.6% (YoY)
April 2025
2,684.41
↑ 1.3% (MoM)
↑ 3.9% (YoY)
Analysis:
Gradual Depreciation: The 3.9% annual depreciation and 1.3% monthly depreciation indicate a controlled weakening, not a crisis, as noted in the provided conclusion. The document’s stable macroeconomic indicators (e.g., inflation at 3.2%, CBR at 6%) support this assessment.
Reserve Support: The USD 5.3 billion in reserves covering 4.3 months of imports provides a buffer, as per the document’s definition of gross official reserves. This ensures the BoT can continue interventions like the USD 6.25 million sale to manage volatility.
Conclusion
The Tanzania Shilling experienced a moderate 3.9% depreciation against the USD from April 2024 (~TZS 2,583/USD) to April 2025 (TZS 2,684.41/USD), with a 1.3% monthly decline from March 2025 (TZS 2,650.24/USD). This trend, driven by lower seasonal export inflows and higher import demand, was mitigated by the Bank of Tanzania’s intervention (USD 6.25 million sold in the IFEM) and robust reserves (USD 5.3 billion). The sharp decline in IFEM transactions to USD 12.9 million in April 2025 reflects reduced market liquidity, but the BoT’s actions ensured stability. The following table summarizes these key figures.
The table is designed to present the data clearly and concisely, wrapped in an artifact tag as per the guidelines
Category
Metric
Value
Exchange Rate Movement
April 2025 Avg. Exchange Rate
TZS 2,684.41/USD
March 2025 Avg. Exchange Rate
TZS 2,650.24/USD
April 2024 Avg. Exchange Rate
~TZS 2,583/USD
Annual Depreciation (Apr 2024–Apr 2025)
3.9%
Monthly Depreciation (Mar–Apr 2025)
1.3%
Interbank Foreign Exchange Market (IFEM)
Total Transactions (Apr 2025)
USD 12.9 million
Total Transactions (Mar 2025)
USD 70.1 million
Total Transactions (Apr 2024)
USD 72 million
BoT Intervention (Apr 2025)
Sold USD 6.25 million
Reserves
Gross Official Reserves
USD 5.3 billion (4.3 months of import cover)
The Bank of Tanzania's financial position for November 2024 reflects a delicate balance between supporting fiscal needs and maintaining economic stability. Key changes include a 2.5% decline in total assets to TZS 25.39 trillion, driven by reduced cash reserves, alongside increased advances to the government by TZS 470 billion. These movements highlight fiscal pressures, external obligation management, and the central bank's critical role in stabilizing the economy amidst tightening financial conditions.
Bank of Tanzania's Statement of Financial Position as of November 30, 2024, with figures and key changes compared to October 2024:
1. Total Assets
November 2024: TZS 25,388,447,414
October 2024: TZS 26,040,992,974
Change: Decreased by TZS 652,545,560 (approximately 2.5%).
This decline reflects changes in various asset components, most notably the sharp drop in cash and cash equivalents, offset partially by an increase in advances to the government.
2. Major Asset Components
a. Foreign Currency Marketable Securities
Value: TZS 8,136,841,550
Observation: This remains the largest asset on the Bank’s balance sheet, indicating the institution's significant reliance on foreign investments.
b. Cash and Cash Equivalents
November 2024: TZS 4,879,028,404
October 2024: TZS 6,028,657,113
Change: Decreased by TZS 1,149,628,709 (~19.1%).
This sharp decline could signal increased liquidity outflows, possibly to meet operational obligations or support the financial system.
c. Advances to Government
November 2024: TZS 5,394,166,906
October 2024: TZS 4,924,120,304
Change: Increased by TZS 470,046,602 (~9.5%).
The rise indicates higher support for government financing needs, which may align with fiscal demands or debt management objectives.
3. Total Liabilities
November 2024: TZS 22,685,046,183
October 2024: TZS 23,185,162,980
Change: Decreased by TZS 500,116,797 (approximately 2.2%).
This reflects reductions in foreign currency financial liabilities, indicating a likely repayment or adjustment of external obligations.
4. Major Liability Components
a. Currency in Circulation
November 2024: TZS 8,625,807,089
October 2024: TZS 8,589,148,419
Change: Increased by TZS 36,658,670 (~0.4%).
This small increase is consistent with seasonal factors or economic growth-related cash demand.
b. Foreign Currency Financial Liabilities
November 2024: TZS 4,933,972,124
October 2024: TZS 5,410,348,462
Change: Decreased by TZS 476,376,338 (~8.8%).
This reduction suggests repayments or reduced foreign currency obligations, contributing to the overall liability decline.
c. Bank and Non-Bank Financial Institution Deposits
Value: TZS 3,231,602,090
Observation: These deposits remain a significant liability, reflecting funds entrusted by financial institutions to the Bank of Tanzania.
5. Equity Position
Total Equity: TZS 2,703,401,231
October 2024: TZS 2,855,829,994
Change: Decreased by TZS 152,428,763 (~5.3%).
Breakdown:
Paid-Up Capital: Unchanged at TZS 100,000,000.
Reserves: Decreased from TZS 2,755,829,994 to TZS 2,603,401,231, reflecting lower retained earnings or adjustments to reserve accounts.
6. Notable Changes and Observations
Cash and Cash Equivalents: The TZS 1.15 trillion drop signals significant liquidity pressures or policy interventions.
Advances to Government: The TZS 470 billion rise indicates greater reliance on central bank funding for fiscal operations.
Currency in Circulation: A slight increase of TZS 36.7 billion aligns with consistent cash demand.
Foreign Currency Financial Liabilities: A reduction of TZS 476 billion highlights improved external balance management.
The November 2024 statement reveals efforts to balance liquidity support to the economy and reduce external obligations. While the decline in total assets and equity signals tightening financial conditions, the increase in advances to the government underscores the central bank's role in supporting fiscal policy.
The Bank of Tanzania's Statement of Financial Position for November 2024 with key insights about the central bank's financial health, economic priorities, and operational trends.
1. Liquidity Pressures and Operational Adjustments
Sharp decline in Cash and Cash Equivalents (down TZS 1.15 trillion): This indicates liquidity outflows, possibly due to:
Interventions in the financial markets to stabilize the Tanzanian shilling.
Support to commercial banks or other financial institutions.
Seasonal outflows, such as government spending obligations (e.g., salary payments or infrastructure financing).
2. Increased Government Financing
Advances to Government up by TZS 470 billion (9.5%): This suggests the government relied more heavily on the central bank for funding in November. Potential reasons include:
Budgetary shortfalls requiring deficit financing.
Delays in revenue collection or international financing.
Efforts to finance ongoing development projects or meet fiscal priorities.
3. Stable Domestic Economic Activity
Currency in Circulation slightly increased (up TZS 36.7 billion): This minor growth suggests stable domestic demand for cash, possibly reflecting:
Economic activity proceeding without major shocks.
Seasonal increases in cash needs (e.g., for holiday spending).
4. Improved Management of External Obligations
Foreign Currency Financial Liabilities decreased by TZS 476 billion (8.8%): This points to:
Successful repayment or refinancing of foreign liabilities.
A reduction in dependence on external financing, possibly due to improved forex inflows or lower external debt servicing.
5. Decline in Equity Reflects Tight Financial Conditions
Equity reduced by 5.3% (TZS 152.4 billion): These decreases, primarily due to lower reserves, could mean:
Lower profits or unrealized losses from foreign currency marketable securities (e.g., due to forex volatility or interest rate changes).
The central bank might be absorbing shocks to stabilize the economy, at the cost of its reserve position.
6. Overall Economic Implications
Fiscal Dependence: The government’s increased reliance on central bank funding highlights fiscal pressures. This could signal challenges in meeting revenue targets or higher expenditure demands.
Monetary Tightening Signals: The reduction in liabilities and cash reserves indicates the central bank might be tightening liquidity to control inflation or stabilize the currency.
Economic Stability: Stable currency in circulation and reduced foreign liabilities suggest the central bank is managing to maintain economic stability despite challenges.
Key Concerns
Shrinking Assets: A 2.5% decline in total assets reflects constrained central bank resources, which may limit its ability to respond to future shocks.
Reliance on Domestic Borrowing: Increased advances to the government could crowd out private sector borrowing and hinder growth if sustained.
Conclusion
The statement shows a central bank balancing multiple priorities: supporting government financing, managing external liabilities, and maintaining domestic liquidity. However, shrinking reserves and declining assets may signal the need for tighter fiscal discipline and a cautious approach to monetary policy.
