Tanzania's economic outlook for 2024 shows strong growth potential, with a projected GDP increase of 5.4%, significantly higher than the 3% average for Sub-Saharan Africa (SSA). As part of the East African Community (EAC), which is forecasted to grow by 4.7% in 2024, Tanzania benefits from macroeconomic stability and strategic investments in infrastructure, particularly in energy, telecommunications, and transport. These investments, combined with stable inflation, are expected to boost private consumption and investment. However, Tanzania's public debt is projected to rise from 42.5% to 48.4% of GDP, reflecting infrastructure spending, while the fiscal deficit is expected to stabilize at 3.3% of GDP. Risks remain, especially around rising debt and climate-related challenges like droughts and floods, which could impact agriculture and economic stability. Despite these risks, Tanzania's growth prospects remain robust in comparison to other SSA countries.

1. Growth Outlook

• Tanzania is expected to experience GDP growth of 5.4% in 2024, outperforming the regional average growth of 3% for SSA​.
• The East African Community (EAC), which includes Tanzania, is one of the strongest economic performers in SSA, with expected growth of 4.7% in 2024 and 5.7% by 2025–26​.

2. Growth Environment

• Tanzania benefits from macroeconomic stability and rising investments in sectors like energy, telecommunications, and transport, which help enhance productivity. The country’s inflation rate is expected to stabilize, supporting private consumption and investment​.
• Private consumption is expected to increase as inflation eases across SSA, with countries like Tanzania reaping benefits from stable inflation and favorable monetary policies, further bolstering growth​.

3. Macroeconomic Performance

• Government debt in Tanzania is estimated to rise slightly from 42.5% of GDP in 2023 to 48.4% of GDP in 2024, reflecting investments in key infrastructure projects​.
• In terms of sectoral performance, Tanzania’s growth is bolstered by services and infrastructure projects in energy and transport. Investment in these areas is critical for sustaining long-term growth​.
• Fiscal Balance: Tanzania's fiscal deficit is expected to improve slightly, with a fiscal deficit of around 3.3% of GDP in 2024​.

4. Risk Outlook

• High Debt: Public debt remains a key risk in Tanzania, as in many other SSA countries. The rising debt levels could strain fiscal resources, especially in a region where debt service obligations are already significant​.
• Climate Change and Conflict: Tanzania is exposed to climate risks and ongoing economic volatility in the region, which could affect agriculture and food security. Extreme weather events such as droughts or floods are persistent risks across the region​.

Tanzania's economic position relative to other Sub-Saharan African (SSA) countries

Tanzania's economy is performing well relative to other Sub-Saharan African countries, with solid growth prospects and important investments. However, the country must address challenges related to debt and climate change to ensure that growth is sustainable.

1. Tanzania’s Strong Growth Outlook: With a projected GDP growth of 5.4% in 2024, Tanzania is set to grow much faster than the Sub-Saharan African average of 3%. This positions Tanzania as one of the leading economies in the region, especially within the East African Community (EAC) where growth is also expected to be robust.
2. Growth Environment: Tanzania benefits from macroeconomic stability and is making significant investments in energy, transport, and telecommunications. These investments are crucial for reducing productivity bottlenecks and fostering economic expansion. Stable inflation will also boost private consumption and investment, further enhancing growth.
3. Macroeconomic Performance: Tanzania's debt level is rising but remains relatively manageable. The government is using this debt to finance critical infrastructure, which is essential for long-term economic development. The country’s fiscal deficit is also improving, suggesting prudent fiscal management.
4. Risk Outlook: Despite its positive growth outlook, Tanzania faces risks related to its rising debt levels, which could become a burden if not managed properly. Additionally, climate-related risks such as droughts and floods, which are common in SSA, pose threats to Tanzania’s agricultural sector and overall economic stability.

Source: Africa’s Pulse October 2024 report

The Bank of Tanzania's Statement of Financial Position as of September 30, 2024, reflects significant developments in the country's economic landscape. Total assets grew by 1% to TZS 25.86 trillion, driven by a 66.7% increase in loans and receivables and a 5.4% rise in foreign currency marketable securities. At the same time, advances to the government decreased by 10.6%, indicating fiscal discipline. The bank’s equity rose by 7%, with reserves growing by 7.4%, showcasing stronger financial stability. These trends highlight key aspects of Tanzania’s economic development, focusing on sustainable growth and investment stability.

Assets

• Cash and Cash Equivalents: TZS 5.88 trillion, a slight decrease from TZS 6.09 trillion in August 2024.
• Special Drawing Rights (SDRs): TZS 5.84 billion, an increase from TZS 5.74 billion the previous month.
• Gold: TZS 84.48 billion, up from TZS 79.66 billion in August, reflecting a 6% increase.
• Quota in IMF: TZS 1.46 trillion, up from TZS 1.44 trillion, representing a marginal increase.
• Foreign Currency Marketable Securities: TZS 8.54 trillion, up from TZS 8.10 trillion, showing a 5.4% increase.
• Government Securities: TZS 1.95 trillion, slightly up from TZS 1.91 trillion.
• Advances to Government: TZS 4.44 trillion, down significantly from TZS 4.96 trillion, representing a decrease of around 10.6%.
• Loans and Receivables: TZS 1.17 trillion, up from TZS 699.11 billion, indicating a notable 66.7% increase.
• Equity Investments: TZS 157.48 billion, up from TZS 140.56 billion (a 12% increase).
• Other Assets: TZS 1.06 trillion, a small decline from TZS 1.11 trillion in August.

Total Assets

• The total assets of the bank as of September 30, 2024, amounted to TZS 25.86 trillion, compared to TZS 25.61 trillion at the end of August 2024, representing a growth of 1% month-on-month.

Liabilities

• Currency in Circulation: TZS 8.47 trillion, up from TZS 8.32 trillion, an increase of 1.7%.
• Deposits from Banks and Non-Bank Financial Institutions: TZS 2.67 trillion, down slightly from TZS 2.73 trillion.
• Foreign Currency Financial Liabilities: TZS 6.11 trillion, up from TZS 5.83 trillion, indicating a 4.9% increase.
• BoT Liquidity Papers: TZS 529.73 billion, down from TZS 536.83 billion.
• IMF Related Liabilities: TZS 1.17 trillion, unchanged from the previous month.

Total Liabilities

• The total liabilities stood at TZS 22.95 trillion, compared to TZS 22.90 trillion at the end of August, showing a slight increase of 0.2%.

Equity

• Authorized and Paid-up Capital: TZS 100 billion, unchanged.
• Reserves: TZS 2.81 trillion, up from TZS 2.62 trillion, reflecting a 7.4% increase.

Total Equity

• The total equity increased to TZS 2.91 trillion from TZS 2.72 trillion, representing a growth of 7%.

Summary

• The Bank of Tanzania saw a moderate increase in both its total assets and liabilities between August and September 2024. The most notable changes were in advances to the government, which dropped by 10.6%, and loans and receivables, which rose by 66.7%. Additionally, equity growth was largely driven by an increase in reserves, marking a 7.4% rise.

Key insights into Tanzania’s economic development by reflecting the central bank’s financial activities and its role in supporting the economy

1. Increase in Foreign Currency Marketable Securities

• The growth of foreign currency marketable securities (up 5.4% from August to September 2024) indicates a higher investment in foreign assets. This reflects an increase in Tanzania's foreign reserves, which supports the country's external trade and provides a buffer against external shocks like fluctuating commodity prices or global financial instability. Strong foreign reserves are a positive signal of economic stability and can improve investor confidence.

2. Reduction in Advances to the Government

• The 10.6% decline in advances to the government (from TZS 4.96 trillion to TZS 4.44 trillion) suggests a reduction in central bank lending to the government, which could signal improved fiscal discipline or alternative sources of government funding (such as tax revenues or external financing). This is important for Tanzania's economic stability, as overreliance on central bank borrowing can lead to inflationary pressures. The reduction could also indicate that the government is focusing on sustainable debt management practices, which contributes to long-term economic growth.

3. Loans and Receivables Growth

• The 66.7% increase in loans and receivables points to a rise in lending to the private sector or other entities, which is essential for economic development. Increased credit availability can drive business investment, expand production capacity, and boost employment opportunities, thereby stimulating economic growth. This growth in loans might be supporting sectors such as agriculture, manufacturing, and services, which are critical for Tanzania’s development.

4. Growth in Currency in Circulation

• The increase in currency in circulation by 1.7% (from TZS 8.32 trillion to TZS 8.47 trillion) could indicate a growing economy with rising demand for cash as businesses expand and consumer spending increases. This is a sign of economic activity and a more robust domestic market. However, excessive currency issuance without corresponding growth in goods and services can lead to inflation, so maintaining a balance is important.

5. Stable IMF and Foreign Liabilities

• The stability of IMF-related liabilities and moderate increases in foreign currency financial liabilities suggest that Tanzania is managing its external obligations in a stable manner. This is crucial for maintaining a positive international reputation and avoiding excessive debt burdens that could slow economic progress.

6. Increase in Gold and SDRs Holdings

• The increase in gold reserves (up 6%) and Special Drawing Rights (SDRs, up 1.6%) signifies that Tanzania is strengthening its reserve assets, which enhances financial stability. These reserves can be used to support the shilling in times of exchange rate volatility or economic distress, promoting macroeconomic stability.

7. Reserves and Equity Growth

• The 7.4% increase in reserves and a 7% rise in total equity reflect the Bank of Tanzania's efforts to build a stronger financial position. Higher reserves provide a buffer for economic risks and allow the central bank to better support the economy through monetary policy, which is essential for fostering growth and controlling inflation.

Conclusion

• The Bank of Tanzania’s financial position reveals positive signs for the country's economic development. The central bank’s strategy of increasing foreign reserves, reducing government dependency on central bank advances, and expanding loans and receivables aligns with key development goals such as fostering fiscal stability, supporting private sector growth, and maintaining monetary stability. These trends support Tanzania’s long-term goals of sustainable economic growth, diversification, and poverty reduction.

Tanzania's economy is projected to grow at a solid rate of 5-6% in 2024, outpacing Sub-Saharan Africa’s average growth of 3.5%. Key drivers of this growth include agriculture (28% of GDP), mining, and a recovering tourism sector. While global inflation, energy prices (with oil at $84 per barrel), and fiscal pressures pose risks, Tanzania’s inflation is expected to remain moderate compared to regional peers. Public debt remains sustainable, supported by large infrastructure projects like the Standard Gauge Railway. However, climate risks and global trade disruptions could impact future growth if not managed carefully.

1. Regional Context: Sub-Saharan Africa (SSA)

• Sub-Saharan Africa’s growth is projected to reach 3.5% in 2024, slightly up from 3.0% in 2023. The region is expected to experience continued growth, hitting 4.0% by 2026​.
• Tanzania, as part of this region, shares similar growth dynamics, heavily influenced by commodity prices, fiscal policies, and global trends like inflation and interest rates.

2. Tanzania’s Growth Outlook

• The World Bank forecast that Tanzania will maintain solid economic growth, particularly in sectors like agriculture, mining, and tourism.
• Growth in Tanzania is typically higher than the regional average. It has been projected to grow at around 5-6% annually, reflecting its diversified economy. Key growth drivers include:
  • Agriculture: Contributing about 28% of GDP, agriculture remains a vital part of Tanzania’s economy. Global trends in agricultural prices, projected to stabilize, could benefit Tanzania’s export revenues.
  • Mining: Tanzania is a significant exporter of gold, and global gold prices are expected to remain stable or grow slightly, which will support the mining sector.
  • Tourism: After a sharp decline during the pandemic, Tanzania’s tourism industry is recovering, contributing to higher GDP growth projections​.

3. Inflation and Fiscal Pressures in Tanzania

• Like many countries in Sub-Saharan Africa, Tanzania is expected to face moderate inflation pressures, influenced by global commodity prices, especially in food and energy. The region's inflation is expected to be higher than the global average but will stabilize in 2024.
• Tanzania’s inflation has been relatively moderate compared to some of its regional peers, thanks to government interventions and policies aimed at maintaining price stability. However, risks remain from:
  • Global energy prices: The report projects oil prices to average $84 per barrel in 2024, which could affect fuel import costs and inflation.
  • Food inflation: Tanzania’s agricultural sector could benefit from stable grain prices, helping to moderate food price inflation​.

4. Public Debt and Investment

• Tanzania’s public debt remains sustainable, but global financing conditions, including rising interest rates, pose risks. Tanzania, like other EMDEs, could face higher borrowing costs if global interest rates remain high, as expected (around 4% through 2026).
• The report emphasizes the importance of public investment in driving growth in emerging markets, and Tanzania's focus on infrastructure projects, such as the Standard Gauge Railway (SGR) and energy projects, will be crucial for sustained growth​.

5. Risks to Tanzania’s Economic Growth

• Geopolitical risks and global trade disruptions could impact Tanzania’s export sectors, especially in minerals and agricultural products.
• Climate-related risks are significant for Tanzania, where agriculture relies heavily on favorable weather conditions. Extreme weather events could disrupt food production, affecting both inflation and growth​.
• Debt distress risks in Sub-Saharan Africa remain elevated, with about 40% of EMDEs at risk. Although Tanzania is not currently in debt distress, careful fiscal management is essential to maintain sustainability​.

6. Tanzania’s Policy Responses

• To mitigate risks, Tanzania will need to focus on:
  • Strengthening public investment efficiency to ensure that infrastructure projects deliver high returns.
  • Diversifying its export base to reduce vulnerability to global commodity price swings.
  • Implementing fiscal policies that support growth while maintaining debt sustainability.

Key Figures for Tanzania (based on SSA and global trends):

• Growth: Projected at 5-6% in 2024, higher than the SSA average of 3.5%​(GEP-June-2024).
• Inflation: Expected to remain moderate but subject to global food and energy price fluctuations.
• Oil prices: $84 per barrel in 2024 could increase import costs for Tanzania, affecting inflation.
• Public investment: Tanzania’s large infrastructure projects are key to sustaining growth but require efficient management and fiscal responsibility.

Summary:

• Tanzania’s economy is expected to continue growing at a solid rate, outperforming the regional average. Growth drivers include agriculture, mining, and tourism.
• Risks from global inflation, commodity prices, and debt sustainability are present, but with sound policies, Tanzania can navigate these challenges.

Source: Global Economic Prospects June 2024 report

Authored by Dr. Bravious Felix Kahyoza PhD, FMVA, CP3P (braviouskahyoza5@gmail.com)

This discussion paper examines the evolution and strategic significance of Tanzania’s economic engagement with China, focusing on investment flows, bilateral cooperation under the Forum on China-Africa Cooperation (FOCAC), and opportunities emerging from the Belt and Road Initiative (BRI). The analysis underscores Tanzania’s transformation into one of the most attractive investment destinations for Chinese enterprises in Africa—anchored on stability, strategic location, and pro-business reforms.

Over the past two decades, China has invested over USD 11.5 billion across 1,360 projects, creating more than 155,000 jobs in Tanzania. This partnership continues to evolve from infrastructure diplomacy toward sustainable industrialization and inclusive growth—reflecting both nations’ commitment to mutual benefit and balanced development.

Key Findings

🇨🇳 Historical Foundations, Modern Convergence
Tanzania-China relations date back to 1964, built on South–South solidarity and anti-colonial cooperation. Landmark projects like the TAZARA Railway in the 1970s laid the foundation for enduring bilateral trust. Under FOCAC (since 2000), Tanzania has gained zero-tariff access to 98% of its exports to China, expanding trade to USD 8.78 billion by 2023.

Strategic Investment Hub
Tanzania’s robust macroeconomic stability, political peace, and pro-market legal reforms make it a leading destination for Chinese foreign direct investment (FDI). Sectors driving current inflows include manufacturing, infrastructure, energy, agriculture, and ICT—supported by economic growth averaging 6–7% annually and inflation contained below 5%.

⚙️ Flagship Chinese Investments
Notable ventures include:

• Keda Tanzania Ceramics – USD 87M (5,000 jobs)
• Kinglion Investment (Steel Roofing) – USD 300M (3,000 jobs)
• Goodwill Ceramics – USD 250M (2,500 jobs)
• Sino Tan Kibaha Industrial Park – USD 800M (10,000 jobs)
• EACLC Mall – USD 400M (4,000 jobs)

These investments highlight China’s leadership in Tanzania’s industrial growth and align with the FYDP III vision for structural transformation and import substitution.

BRI and FOCAC Synergy
Through BRI, large-scale infrastructure such as Bagamoyo Port (USD 10B) and industrial zones enhance regional connectivity. FOCAC complements this by promoting green investment, skills transfer, and policy harmonization, ensuring people-centered growth.

Reforms and Institutional Strengthening
The Tanzania Investment Act of 2022 streamlined procedures by eliminating over 230 redundant taxes, improving licensing timelines, and strengthening arbitration mechanisms under ICSID. Agencies like TIC and EPZA now serve as one-stop centers for investors, offering tax holidays and capital repatriation guarantees.

Challenges and Future Prospects

While Chinese investment has boosted industrial capacity, environmental and social sustainability issues persist, particularly in extractive industries and agriculture. Bureaucratic inefficiencies and uneven policy enforcement remain barriers to consistent investment outcomes.

To sustain long-term benefits, Tanzania must:

• Strengthen environmental governance in FDI-linked sectors;
• Promote technology transfer for local SMEs;
• Deepen bilateral transparency in project financing;
• Align investment with green growth and digital trade strategies.

With effective reforms, trade volumes and job creation are projected to double by 2030, reinforcing the win-win narrative of Tanzania-China cooperation.

Conclusion

Tanzania’s partnership with China has evolved from ideological solidarity to a pragmatic economic alliance shaping Africa’s future growth trajectory. Through BRI and FOCAC, Tanzania exemplifies how infrastructure-led and industrial diversification can transform emerging economies—if guided by sustainability, transparency, and local value creation.

This paper concludes that Tanzania’s investment imperative lies not only in attracting capital but in ensuring that every yuan invested translates into skills, technology, and shared prosperity for Tanzanians.

Read the Full Paper:
Tanzania's Investment Imperative in the Context of China-Africa Relations (FOCAC)
Published by TICGL | Economic Research Centre