From a negligible 0.22% of GDP in the 1970s to a strong $1.63 billion in 2023, Tanzania’s Foreign Direct Investment (FDI) story reflects over five decades of transformation and resilience. Following economic liberalization in the mid-1990s, FDI surged from near zero in 1990–1991 to over 4% of GDP by 1999, peaking at 5.66% in 2010 during Tanzania’s golden decade of investment expansion. Despite a pandemic-related dip in 2020, FDI rebounded sharply—rising from $943.8 million in 2020 to $1.63 billion in 2023, a 13.18% annual increase—demonstrating sustained investor confidence and Tanzania’s continued role as one of East Africa’s most attractive investment destinations.
Tanzania's foreign direct investment (FDI) has demonstrated remarkable resilience and growth in recent years, recovering strongly from the economic disruptions of 2020. The country attracted $1.63 billion in FDI during 2023, representing a 13.18% increase from the previous year and marking three consecutive years of growth since the pandemic-induced decline.
The period from 2020 to 2023 tells a compelling story of economic recovery and increasing investor confidence in Tanzania's economy:
| Year | FDI Value (USD) | Year-on-Year Change | FDI as % of GDP |
| 2023 | $1.63 billion | +13.18% | 2.06% |
| 2022 | $1.44 billion | +20.75% | 1.90% |
| 2021 | $1.19 billion | +26.14% | 1.68% |
| 2020 | $943.77 million | -22.47% | 1.43% |
The 2020 decline of 22.47% reflects the global economic uncertainty caused by the COVID-19 pandemic. However, the subsequent recovery has been robust, with 2021 showing the strongest year-on-year growth at 26.14%, followed by steady expansion in 2022 and 2023.
Examining FDI as a proportion of GDP reveals important insights into the evolving relationship between foreign investment and Tanzania's economic development. The country experienced its peak FDI-to-GDP ratio in 2010 at 5.66%, followed by another strong period from 2012-2013 when ratios exceeded 4.5%.
| Year | % of GDP | Year | % of GDP |
| 2010 | 5.66% | 2008 | 4.95% |
| 2013 | 4.57% | 2005 | 5.09% |
| 2012 | 4.54% | 2015 | 3.18% |
| Year | % of GDP | Year | % of GDP |
| 2023 | 2.06% | 2019 | 1.99% |
| 2022 | 1.90% | 2018 | 1.70% |
| 2021 | 1.68% | 2017 | 1.76% |
| 2020 | 1.43% | 2016 | 1.74% |
| Year | % of GDP | Year | % of GDP |
| 2004 | 2.65% | 1996 | 1.59% |
| 2003 | 2.09% | 1995 | 1.57% |
| 2002 | 2.80% | 1994 | 0.76% |
| 2001 | 4.05% | 1993 | 0.33% |
| 2000 | 3.47% | 1992 | 0.18% |
| 1999 | 4.07% | 1990-1991 | 0.00% |
| 1998 | 1.42% | ||
| 1997 | 1.41% |
| Period | Range | Notable Years |
| 1970-1989 | -0.07% to 0.22% | Minimal FDI activity; 1972 peaked at 0.22% |
Economic Transformation
The data reveals Tanzania's economic transformation from a virtually closed economy in the 1980s and early 1990s to an increasingly attractive destination for foreign investors. The liberalization reforms of the mid-1990s marked a turning point, with FDI ratios climbing from 0% in 1990-1991 to over 4% by the late 1990s.
The Golden Decade (2005-2015)
The period between 2005 and 2015 represents Tanzania's most successful era for attracting FDI relative to GDP size. During this decade, the country consistently maintained FDI levels above 2% of GDP, with multiple years exceeding 4%. This period coincided with major mining investments, telecommunications sector growth, and infrastructure development projects.
Recent Moderation
Since 2016, FDI as a percentage of GDP has stabilized at a lower level, generally ranging between 1.4% and 2.1%. While this represents a moderation from the peak years, it reflects a more mature investment environment and steady, sustainable foreign capital inflows.
Post-Pandemic Recovery
The post-2020 recovery is particularly noteworthy. Not only has Tanzania regained its pre-pandemic FDI levels in absolute terms, but the country has also improved its FDI-to-GDP ratio from 1.43% in 2020 to 2.06% in 2023, surpassing even the 2019 level of 1.99%.
Outlook and Implications
Tanzania's consistent FDI growth over the past three years signals renewed international confidence in the country's economic prospects. The government's ongoing infrastructure investments, natural resource development, and efforts to improve the business environment appear to be yielding positive results.
As Tanzania continues to position itself as a key investment destination in East Africa, maintaining this growth trajectory while ensuring that foreign investments contribute to sustainable development and local economic capacity will be crucial for long-term prosperity.
Data Source: TICGL Historical FDI data from 1970 to 2023