Economic and Political Overview

flag Tanzania Tanzania: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Tanzania has experienced strong growth in recent years, with an average growth of 6.5% in the last decade, thanks to a high level of exports in natural resources, developments in the tertiary sector (telecommunications, transportation, finance, tourism) and the establishment of a liberalisation programme. However, due to the Covid-19 pandemic and the collapse in tourism induced by the travel restrictions, economic activity slowed down, GDP growth declining from 7% in 2019 to 4.8% in 2020 and 4% in 2021 (IMF). Tanzania was nonetheless one of the rare economies not to fall into economic recession, thanks to gold exports and only light health restrictions. Economic growth is expected to pick up to 5.1% in 2022 and 5.5% in 2023 (IMF), supported by private consumption. Downside risks include weak fiscal metrics, elevated debt stocks and ongoing uncertainty over the pandemic (Focus Economics).

Even though Tanzania did not put in place strict lockdown measures, its economy decelerated in 2020 and 2021 due to a major slowdown in regional activity and trade, along with a severe downturn in the tourism sector. To mitigate the health and socioeconomic effects of the pandemic, the authorities implemented a comprehensive emergency response plan, the Covid-19 Socioeconomic Response Plan (TCRP), which includes a vaccination campaign. The country benefitted from emergency financial assistance under the IMF’s Rapid Credit Facility (RCF). Increased expenditures caused public deficit to widen to -3.4% GDP in 2021 (from -1.9% GDP in 2020), and it is expected to further increase to -3.9% GDP in 2022 (Coface). Fuelled by ongoing infrastructure projects, public debt increased from an estimated 39.1% GDP in 2020 to 39.7% GDP in 2021, and it is forecast to gradually decrease to 39.6% GDP in 2022 and 38.9% in 2023 (IMF). Tanzania’s risk of external and public debt distress remains moderate. Inflation decreased from an estimated 3.3% in 2020 to 3.2% in 2021, and it is expected to slightly increase to 3.4% in 2022 and 3.5% in 2023 (IMF). Despite higher imports and high commodity prices, inflation remains below the central bank's 5% target (Coface). The priorities are to carry on the vaccination campaign, enhance social safety nets and improve transparency, public resource management and administration. The government has adopted an ambitious development plan (Tanzania Development Vision 2025) focused on supporting the private sector, industrialization and creation jobs. It aims to improve the business climate by upgrading infrastructure, facilitating access to finance and advancing the level of education. Zanzibar also revealed a five-year USD 2 billion plan to diversify away from the tourism industry (Focus Economics). Long-standing structural problems include mismanagement of public finances and an underdeveloped legal framework that undermines the effectiveness of regulation. In addition, the country remains heavily dependent on foreign aid, with almost a third of its budget coming from international aid.

The poverty rate, which was as high as 60% in 2007, was estimated at 49.5% in 2020 (World Bank). Poverty and income inequality remain high despite high economic growth. The country also has a high HIV/AIDS rate and many people lack access to basic services (water, electricity and healthcare). Additionally, the quality of primary health care has been negatively affected by a range of factors, including shortage and poor distribution of health workers, poor access to essential medicines and poor infrastructure. According to World Bank data, unemployment rate was 2.5% in 2020.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 60.8164.4069.2474.5480.08
GDP (Constant Prices, Annual % Change) 7.04.84.05.15.5
GDP per Capita (USD) 1,080e1,1101,1591,2121,264
General Government Gross Debt (in % of GDP) 39.0e39.1e39.739.638.9
Inflation Rate (%) 3.4e3.3e3.74.45.4
Current Account (billions USD) -1.54-1.14e-2.24-2.86-2.53
Current Account (in % of GDP) -2.5-1.8e-3.2-3.8-3.2

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Tanzania has a vast natural resource wealth, with significant reserves of gold, diamond, iron, coal, nickel, tanzanite, uranium, tin, phosphates, gemstones, and natural gas. Even though only about 14% of the land is arable, agriculture is the backbone of the Tanzanian economy. It employs 65% of the workforce and accounts for 26.7% of the country's GDP, although the sector's contribution to the economy has been declining gradually (World Bank). Tanzania's main crops are tobacco, coffee, cashew nuts, tea, cloves, cotton and sisal plant. Due to its diverse climatic and geographic zones, Tanzania has one of the widest crop varieties in Africa. Livestock production, especially cattle and sheep, is another important component of the primary sector. Agriculture is also a main source of exports; however, its real value has declined by up to 85% over the last 30 years, with the fall of global commodity prices.

Industry accounts for 28.7% of GDP and employs around 6% of the workforce. Manufacturing makes up more than half of the secondary sector, followed by processing (around 40%) and assembling industries (less than 5%). The manufacturing sector is largely centred on the processing of agricultural products. Mining makes an important contribution to the economy, mainly through the extraction of gold, nickel and copper. The country has significant gold reserves and is the 8th largest producer in Africa. The construction sector has been progressively contributing to GDP, with increasing infrastructure and real estate projects.

Services account for 36.3% of GDP and employs 28% of the total workforce. Transport and storage, financial and insurance activities, and information and communication are the fastest growing sectors. Tourism is another important component of the tertiary sector as Tanzania has one of the richest and most diverse wildlife in Africa. It contributes to around 10% of the GDP and 10% of employment. Tourism and trade were particularly impacted by the Covid-19 pandemic in 2020, and activity remained below pre-pandemic levels in 2021.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 65.1 6.5 28.4
Value Added (in % of GDP) 26.7 28.7 36.3
Value Added (Annual % Change) 3.1 2.5 0.9

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Tanzanian Shilling (TZS) - Average Annual Exchange Rate For 1 MUR 61.2564.6466.7164.8058.31

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
61,3/100
World Rank:
93
Regional Rank:
8

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Tanzania is open to foreign trade, which represents 30% of its GDP (World Bank). The country's trade policy aims to create local industries that are more competitive and to diversify its export sector in order to stimulate economic growth. Tanzania mainly exports gold (48.72% of total exports), nuts (6.3%), precious metal ores (5.89%), vegetables, coffee, cereals and tobacco (ITC, 2020). The main imports are petroleum (16.25% of total imports), machinery (11.18%), vehicles (8.84%), electrical equipment (7.86%), plastics, pharmaceutical products, iron, cereals and fertilizers (ITC, 2020).

Tanzania's main suppliers are China (25.3% of total imports), India (12.8%), the United Arab Emirates (9.7%), Japan (4.4%), South Africa (4.1%) and Saudi Arabia (4%). Its main customers are South Africa (19.1% of total exports), Switzerland (14.3%), the United Arab Emirates (12.4%), India (8.7%), China (3.9%), Kenya (3.8%) and Vietnam (3.8%) (ITC, 2020). Low customs duties (the average applied tariff rate is 7%) and few trade restrictions make the country easily accessible for international trade. Trade barriers are mainly of a logistic and non-tariff nature. For example, increased traffic in and out of the Dar es Salaam port - the main port of entry and exit of merchandise for both Tanzania and its landlocked neighbouring countries (Uganda, Rwanda, Burundi and Zambia) - has not been followed up with the necessary infrastructural investments. This constitutes one of the main barriers to trade with these countries. Poorly maintained roads and railroads also make trade difficult. However, the government has launched a large number of projects to improve infrastructure. Obtaining construction permits, registering land, and tax payments remain difficult nonetheless. Tanzania is a member of the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA), and as such, the country has trade relations with the member countries as well as the EU and the United States.

Tanzania suffers from a chronic trade deficit due to a capital-intensive growth model highly demanding for oil and capital goods imports. However, trade deficit is expected to decrease sharply in the future due to the increase in coal and hydrocarbon reserves. In 2019, the deficit reached USD -3.22 billion (World Bank). In 2020, merchandise exports reached USD 6.06 billion, while imports amounted to USD 7.89 billion (WTO). Exports of services reached USD 2.29 billion, while imports amounted to USD 1.14 billion (WTO). In 2020, due to the COVID-19 pandemic, trade volume dropped significantly. Tanzanian trade deficit decreased due to lower imports of capital goods, but it soared again in 2021 with the recovery and increase in oil prices. Imports related to infrastructure projects, as well as medical equipment and vaccines, will weigh on the trade balance of goods, while the services account will continue to register rising surplus (Coface).

 
Foreign Trade Indicators 20162017201820192020
Imports of Goods (million USD) 9,6119,3009,1209,4527,889
Exports of Goods (million USD) 5,0724,1134,0415,0056,061
Imports of Services (million USD) 2,0881,9521,8401,6691,144
Exports of Services (million USD) 3,7203,8304,0004,2762,287
Imports of Goods and Services (Annual % Change) -8.9-7.116.7-1.4-7.6
Exports of Goods and Services (Annual % Change) -0.0-4.1-1.719.0-8.6
Imports of Goods and Services (in % of GDP) 19.117.117.917.015.3
Exports of Goods and Services (in % of GDP) 16.315.114.716.014.3
Trade Balance (million USD) -3,590-3,355-3,854-3,222n/a
Trade Balance (Including Service) (million USD) -2,167-1,553-1,741-704n/a
Foreign Trade (in % of GDP) 35.432.232.633.029.6

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2018
Rwanda 18.7%
Kenya 9.2%
Democratic Republic of Congo 8.5%
Zambia 7.3%
Uganda 5.3%
See More Countries 51.0%
Main Suppliers
(% of Imports)
2018
China 20.7%
India 14.3%
United Arab Emirates 10.2%
Saudi Arabia 6.7%
South Africa 5.1%
See More Countries 43.0%

Source: Comtrade, Latest Available Data

 
 

Main Products

3.7 bn USD of products exported in 2018
Furniture and parts thereof, n.e.s. (excl. seats...Furniture and parts thereof, n.e.s. (excl. seats and medical, surgical, dental or veterinary furniture) 4.7%
Quicklime, slaked lime and hydraulic lime (excl....Quicklime, slaked lime and hydraulic lime (excl. pure calcium oxide and calcium hydroxide) 3.3%
Tableware, kitchenware, other household articles...Tableware, kitchenware, other household articles and toilet articles, of plastics (excl. baths, shower-baths, wash-basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware) 3.1%
Motor vehicles for the transport of goods, incl....Motor vehicles for the transport of goods, incl. chassis with engine and cab 2.7%
Parts and accessories suitable for use solely or...Parts and accessories suitable for use solely or principally with the machine-tools of heading 8456 to 8465, incl. work or tool holders, self-opening dieheads, dividing heads and other special attachments for machine-tools, n.e.s.; tool holders for any type of tool for working in the hand 2.7%
See More Products 83.4%
8.6 bn USD of products imported in 2018
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 19.1%
Palm oil and its fractions, whether or not refined...Palm oil and its fractions, whether or not refined (excl. chemically modified) 2.6%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.4%
Motor vehicles for the transport of goods, incl....Motor vehicles for the transport of goods, incl. chassis with engine and cab 2.3%
Flat-rolled products of iron or non-alloy steel,...Flat-rolled products of iron or non-alloy steel, of a width >= 600 mm, hot-rolled, not clad, plated or coated 2.3%
See More Products 71.4%

Source: Comtrade, Latest Available Data

 
 

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Main Services

Source: United Nations Statistics Division, Latest Available Data

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Political Outline

Current Political Leaders
President: Samia Suluhu Hassan (Since 19 March 2021. She succeeded to President John Magufuli who died on 17 March 2021)
Prime Minister: Kassim Majaliwa
Next Election Dates
General election: October 2025
Main Political Parties
Chama Cha Mapinduzi (Party of the Revolution) (dominant ruling party) - Socialism

Chama cha Demokrasia na Maendeleo  (Party for Democracy and Progress) - Centre-right
Civic United Front (Chama Cha Wananchi) - Liberalism
Tanzania Labour Party - Left-wing
National Convention for Construction and Reform – Mageuzi - Social democracy
United Democratic Party - Liberalism

In 2014 elections, four opposition parties (CUF, CHADEMA, NCCR-Mageuzi, and NLD) united to form Coalition for the People's Constitution (Umoja wa Katiba ya Wananchi) or UKAWA and appointed one candidate.

Type of State
United Democratic Republic.
Executive Power
Executive power is exercised by the government. The President of Tanzania is both chief of state and head of the executive power. The President is elected in a national election every five years in which they must win more than 50% of the votes. The Cabinet consists of the President, the Prime Minister, Vice-President and ministers appointed by the President among National Assembly members. The President also has the right to nominate 10 non-elected members of Parliament, who are eligible to become cabinet members.
Legislative Power
Legislative power is vested in the Parliament; however, the President exercises authority to assent to bills in order to complete the enactment process before they become law. The National Assembly and the President make up the Parliament. The National Assembly, or Bunge, is formed of 393 members: 264 elected from single-member districts by first-past-the-post, 113 elected from women-only lists by party-list proportional representation, 5 elected indirectly by the Zanzibar House of Representatives, Attorney General and 10 members appointed by the President. The National Assembly deals with both Union and non-Union matters that are not in the scope of the Zanzibar Government. The Zanzibar House of Representatives is the unicameral legislature of the islands of Zanzibar.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
124/180

Source: World Press Freedom Index, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
5/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Tanzania, please visit the Worldometer page on Coronavirus in Tanzania.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in Tanzania consult the Ministry of Health’s document National Guideline of Clinical Management and Infection Prevention and Control of Novel Coronavirus (COVID-19).
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
There are no specific import or export restrictions in Tanzania so far. For future possible up-to-date information please visit the website of the Ministry of Industry and Trade.

For a general overview of trade restrictions due to COVID-19 pandemic, please consult the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan
There is no specific economic recovery plan in Tanzania so far. For future possible up-to-date information please visit the website of the Ministry of Finance and Planning.

For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal monetary and macroeconomic) taken by the Tanzanian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Tanzania in the IMF’s Policy Tracker platform.

Support plan for businesses

There are no specific support plans for businesses in Tanzania so far.For future possible up-to-date information please visit the website of the Tanzania Investment Centre.

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

There are no specific support plans for exporters in Tanzania so far. For future possible up-to-date information please visit the website of the Ministry of Industry and Trade.

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: July 2022