In the year ending February 2025, Tanzania’s external sector showed remarkable improvement, with the current account deficit narrowing to USD 2.81 billion from USD 4.43 billion in the previous year. This positive shift was driven by a rise in total exports to USD 14.29 billion, up from USD 12.23 billion, supported by increased earnings from gold (USD 2.87 billion) and traditional exports like cashew nuts and coffee. Tourism earnings surged to USD 3.25 billion following 1.8 million international arrivals, marking a 33.6% rise. Meanwhile, the balance of payments deficit declined significantly to USD 58.6 million, signaling enhanced resilience in Tanzania’s foreign exchange position.

Tanzania’s External Sector Performance – February 2025

🔸 1. Current Account

• The current account deficit narrowed to USD 2.81 billion for the year ending February 2025, down from USD 4.43 billion in February 2024.
• This improvement is attributed to increased export earnings, particularly from services like tourism and traditional exports.

🔹 2. Exports of Goods and Services

• Total exports amounted to USD 14.29 billion, up from USD 12.23 billion in the previous year.

Breakdown:

• Goods exports:
  • USD 8.22 billion (↑ 4.3%)
  • Gold remained dominant at USD 2.87 billion
  • Traditional exports surged by 46.5%, led by:
    • Cashew nuts: USD 426.2 million
    • Coffee: USD 282.4 million
    • Cotton: USD 152.9 million
• Services exports:
  • USD 6.07 billion (↑ 36.3%)
  • Mainly driven by tourism and transport services

🔹 3. Imports of Goods and Services

• Total imports stood at USD 17.91 billion, slightly up from USD 17.69 billion.

Composition:

• Goods imports:
  • USD 14.42 billion
  • Driven by:
    • Transport equipment (USD 1.92 billion)
    • Industrial transport machinery (USD 1.72 billion)
    • Refined petroleum (USD 3.66 billion)
• Services imports:
  • USD 3.49 billion

🔸 4. Balance of Payments (BoP)

• The overall Balance of Payments recorded a deficit of USD 58.6 million, a sharp improvement from USD 713.2 million deficit in the year ending February 2024.
• This positive shift reflects growth in exports, tourism recovery, and stable inflows from foreign investments and grants.

 5. Tourism Sector Update

• Tourism receipts rose to USD 3.25 billion, up by 33.6% from the previous year.
• This growth was supported by an increase in tourist arrivals, reaching 1.8 million visitors, driven by:
  • Eased travel restrictions
  • Global tourism recovery
  • Improved destination marketing

What This Tells Us

• Tanzania's external sector is rebounding strongly, especially through tourism and traditional exports.
• The narrowing of the current account deficit and improved BoP position reflect a healthier external environment.
• However, the country remains vulnerable to import-related pressures, particularly on fuel and industrial goods.

Key Takeaways: What It Tells Us

1. Improving External Balance
   Tanzania's current account deficit narrowed significantly from USD 4.43 billion to USD 2.81 billion, indicating a stronger trade performance. This shows the country is earning more foreign exchange through exports and services like tourism, while managing its import bill.
2. Export Growth Is Driving Recovery
   Exports rose to USD 14.29 billion (from USD 12.23 billion), boosted by:
   • Gold exports (USD 2.87 billion)
   • Cashew nuts (USD 426.2 million)
   • Coffee and cotton
   • A surge in service exports (USD 6.07 billion), particularly in tourism and transport
3. Tourism Is Back and Booming
   Tourism earned USD 3.25 billion, a 33.6% increase, with 1.8 million visitors. This is a clear sign of post-COVID recovery and improved destination appeal, contributing directly to foreign reserves and job creation.
4. Imports Still High, but Stable
   Imports slightly increased to USD 17.91 billion, mainly due to essential imports like:
   • Refined petroleum (USD 3.66 billion)
   • Transport and industrial machinery This suggests a productive use of imports (e.g., infrastructure or industrialization), not just consumption.
5. Balance of Payments Turning Positive
   The BoP deficit shrank from USD 713.2 million to just USD 58.6 million, showing better foreign exchange management and inflows from investments and grants. This boosts investor confidence and economic stability.

💡 Bottom Line:

Tanzania’s external sector shows resilience and recovery, with exports and tourism leading the way. If this trend continues, it will help strengthen the shilling, foreign reserves, and overall economic stability.