Receipts Up 4.6% to USD 6.97bn, Payments Rise 18.6% (YE Sept 2025)

Tanzania’s external sector strengthened in the year ending September 2025, supported by solid performance in services—particularly tourism and transport—which pushed total service receipts to USD 6,973.9 million (+4.6%). Travel services dominated, rising to approximately USD 3,903.1 million on the back of an 11.9% increase in tourist arrivals, while transport receipts expanded to USD 2,535.4 million due to higher regional freight and logistics activity. Other services remained robust, reflecting steady growth in ICT, financial, and professional service demand. However, service payments grew faster at +18.6% to USD 3,089.5 million, driven by increased freight costs associated with expanding goods imports, rising demand for machinery and industrial supplies, and higher business service usage. Despite this, the net services surplus remained strong at USD 3,884.4 million—though slightly lower than the previous year (–4.4%). Overall, the external sector’s services component continues to anchor FX stability, support narrowing current account deficits, and enhance macroeconomic resilience, even as import-service demand signals rising investment intensity and structural growth across the economy.

1. Overview of External Sector Performance

Tanzania’s external sector strengthened in the year ending September 2025, mainly due to improved services performance—especially tourism and transport.

• Service receipts grew to USD 6,973.9 million, up from USD 6,667.1 million in 2024
• Service payments rose to USD 3,089.5 million, up from USD 2,604.2 million in 2024

This resulted in a positive services balance, supporting the narrowing of the current account deficit.

2. Services Export (Receipts) by Category

Total Service Receipts (Year ending September 2025)

Source: Bank of Tanzania calculations

Breakdown by Category:

Key Drivers

• Tourism sector recovery with arrivals reaching 2.3 million visitors (+11.9%)
• Transport services improved due to increased regional freight movement.
• Strong demand for business and communication services.

3. Services Import (Payments)

Total Service Payments (Year ending September 2025)

Source: Bank of Tanzania calculations

Key Drivers of Services Payments

• Higher freight costs linked to increased goods import bill.
• Strong demand for machinery, industrial supplies, and transport equipment.
• Increased financial and business services imports.

4. Current Account Services Summary Table

Source: Services account summary (Table and figures)

Even though receipts increased, payments grew faster, slightly reducing the net services surplus.

5. External Sector Service Components

Implications of External Sector Performance in the Year Ending September 2025

The external sector data for the year ending September 2025, primarily from Section 2.8 (External Sector Performance) of the Bank of Tanzania's (BOT) Monthly Economic Review (October 2025), highlights a services-led strengthening that narrows the current account (CA) deficit to near balance, with goods and services exports at USD 17,094.2 million nearly matching imports at USD 17,728.7 million (deficit of USD 634.5 million, down from prior years). Services receipts rose 4.6% to USD 6,973.9 million (tourism dominant at ~USD 3,903.1 million, +15.8% driven by 2.3 million arrivals, +11.9%), while payments grew faster at +18.6% to USD 3,089.5 million (freight/machinery-led), yielding a net surplus of USD 3,884.4 million (-4.4%). This builds on Q2 2025's CA surplus of USD 1,029 million (up from USD 812 million in Q1), complementing mainland GDP growth (6.3%), shilling appreciation (+9.4% y/y; Section 2.5), and reserves (USD 6,657 million, 5.8 months import cover). Below, I detail implications, focusing on services dynamics and macroeconomic ties.

1. Services Receipts: Tourism and Transport as Resilience Pillars

• +4.6% to USD 6,973.9M (Travel ~USD 3,903.1M, Transport USD 2,535.4M, Others ~USD 2,535.4M): Tourism's 56% share (up from ~50% in 2024) reflects post-recovery surge (arrivals +11.9%, earnings +15.8%), fueled by global demand (IMF 3.2% growth; Section 1.0) and Zanzibar synergies (USD 1,503.9M receipts, +36.4%). Transport growth (+11.1%) ties to regional freight (EAC trade), while "others" (ICT/finance/construction) held steady amid private credit expansion (16.1% y/y).
• Broader Implications:
  • Positive: Bolsters FX inflows (supporting BOT's USD 11M intervention), enhancing reserves and shilling stability (lowering import costs, e.g., energy inflation 3.7%). Drives services contribution to GDP (~15–20%, aligning with financial sector growth), sustaining 6% projection via tourism multipliers (jobs/investment).
  • Risks: Tourism concentration (56%) exposes to shocks (e.g., protectionism; Charts 1.1a/b or pandemics), while transport ties to commodity volatility (oil down but freight up).

2. Services Payments: Rising but Manageable Import Demand

• +18.6% to USD 3,089.5M: Freight (linked to goods imports up 12.5% to USD 10,639.2M) and business/financial services drove growth, reflecting machinery/transport equipment demand for infrastructure (development spend TZS 1,272.9B; Section 2.6) and mining/agri expansion (1.5%/1.8% GDP shares).
• Broader Implications:
  • Positive: Signals productive import use (capital goods for growth), with shilling strength (+9.4%) mitigating pass-through (e.g., fuel prices down). Faster payments growth is offset by receipts, keeping net positive.
  • Risks: If unchecked (e.g., global oil rebound), could pressure CA (national deficit narrowed but imports +12.5% y/y). Ties to fiscal revenue shortfalls (87.2% target) if import duties lag.

3. Net Services Balance and Overall Trade: Narrowing Deficits for Stability

• Net Surplus USD 3,884.4M (-4.4% from USD 4,062.9M): Despite payments outpacing receipts, surplus covers goods deficit (USD 1,029M trade surplus in Q2, but annual goods imports > exports), yielding improved CA (deficit ~1.5% GDP vs. 2.5% 2024). Goods/services balance near parity supports external sustainability.
• Broader Implications:
  • Positive: Reinforces reserves (5.8 months cover), debt service (9.8% exports; Section 2.7), and monetary policy (IBCM 6.45%). Complements Zanzibar's USD 836.6M CA surplus (+34.7%), enhancing union-wide resilience and EAC convergence.
  • Risks: Net erosion (-4.4%) from payment growth signals vulnerability if tourism slows (e.g., unemployment pressures; Section 1.0). Global trade uncertainty (elevated indices) could amplify goods imbalances.

4. Macroeconomic and Policy Context from the Review

• Synergies: Services strength fuels M3 growth (20.8% y/y;), low inflation (3.4%; via import relief), and fiscal space (deficit TZS 618.5B; Section 2.6). Tourism/transport ties to output drivers (construction/mining; Section 2.1) and Zanzibar (arrivals +28.2%).
• Outlook: Projections: CA deficit <2% GDP, sustained by 6% growth and commodity stability (gold up). Policy focus: Diversify services (e.g., ICT) to buffer risks.

In summary, the year-ending September 2025 external sector implies a services-anchored turnaround, with tourism/transport fortifying FX stability and growth amid narrowing deficits. This configuration—echoing the Review's prudent policy emphasis—bolsters inflation control and reserves, though diversifying beyond tourism is key to countering global volatilities into 2026.