Tanzania's Rising Attractiveness in Foreign Direct Investment: A 2023 Snapshot
In the global context, Tanzania has shown modest but steady growth in attracting Foreign Direct Investment (FDI). Inflows into the country have contributed significantly to various sectors, particularly in natural resources, infrastructure, and tourism. Tanzania's FDI inflows in 2023 were reported at $1.3 billion, showing a slight increase from the previous year. Despite the global downturn in FDI, Tanzania's relative stability and economic reforms have continued to attract investment.
In Africa, FDI inflows decreased by 3% in 2023, totaling $53 billion. While some regions and industries within Africa saw declines, there were sectors like chemicals and electronics which registered increases in project values. The top recipients included countries like Egypt and Nigeria, which attracted larger volumes of FDI. European countries remain significant investors in Africa, with the Netherlands, France, the United States, and the United Kingdom holding substantial FDI stocks in the continent. The value of greenfield projects announced in Africa dropped from $196 billion in 2022 to $175 billion in 2023, although the number of projects increased by 7%.
In the East African context, Tanzania is one of the leading recipients of FDI. The region collectively attracted significant investments, and Tanzania's $2.4 billion positioned it competitively among its neighbors. This influx is partly driven by investments in key sectors such as mining, manufacturing, and services, which are critical for the country's economic development.
Tanzania stands out as a notable destination for FDI. The region overall has attracted various investments, particularly in sectors like renewable energy, infrastructure, and manufacturing. The East African Community (EAC) has been working towards creating a more favorable investment climate, which has positively impacted Tanzania's ability to attract FDI. Specific data on Tanzania within the East African context indicates that despite regional challenges, the country continues to see investment flows aimed at exploiting its rich natural resources and growing consumer market.
Within East Africa, Tanzania is one of the leading countries in terms of attracting FDI. Inflows have been substantial, contributing to significant economic activities and infrastructure development. Compared to its neighbors:
FDI has been crucial for Tanzania's economic development, playing a key role in several sectors:
Overall, FDI has not only provided capital but also technology transfer, managerial expertise, and access to international markets, which are critical for sustainable economic growth.
These trends highlight Tanzania's strategic importance in both regional and global investment landscapes, emphasizing the need for continued efforts to improve the investment climate and leverage FDI for economic development.
FDI has played a critical role in Tanzania's economic development by: