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United Republic of Tanzania

United Republic of Tanzania

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Key Facts

  • Capital: Dodoma
  • Region: East Africa
  • Official languages: Swahili and English
  • Independence Day: December 09, 1961
  • Area: 945,000 sq km
  • Population (2018): 56.3 million
  • REC membership: EAC, SADC
  • WTO membership: January 1, 1995
  • GDP (2018): US$ 58.001 billion
  • GNI per capita (2018): US$ 1 020
  • Currency: Tanzanian shilling

Economic overview

Real GDP growth was estimated at 6.8% in 2019, down slightly from 7% in 2018. A markedly diversified economy, characterized by robust private consumption, substantial public spending, strong investment growth, and an upturn in exports underpinned the positive outlook. Tourism, mining, services, construction, agriculture, and manufacturing are notable sectors. Growth is projected to be broadly stable at 6.4% in 2020 and 6.6% in 2021, subject to favorable weather, prudent fiscal management, mitigation of financial sector vulnerabilities, and implementation of reforms to improve the business environment.

Inflation fell to an estimated 3.3% in 2019 from 3.6% in 2018 due to an improved food supply. The Tanzanian shilling was fairly stable in 2019, exchanging at an average of 2,290 to the dollar, compared with 2,263 in 2018. The fiscal deficit, financed mainly by concessional external debt, stood at 2.0% of GDP in 2019, up from 1.3% in 2018, and is projected to stabilize at 1.9% in 2020 and 2.2% in 2021. External public debt – 63% of it concessional – constituted 70.4% of total public debt in 2019. The current account deficit slightly widened to 3.4% of GDP in 2019 from 3.3% in 2018.

Sustained political stability, strategic geographical location, diversified economy with abundant natural resources, and strong record of economic governance point to a positive medium-term outlook that will see progress toward long-term development goals. Public financial management scores have consistently remained above 4 (of 6) since 2013, according to the Country Policy and Institutional Assessment.

The current administration’s ambitious development agenda focuses on creating a better business environment through improved infrastructure, access to financing, and education progress. It seeks to capitalize on previously underexploited strengths and opportunities. The government prioritizes efforts improving public administration, and managing public resources for improved social outcomes – all geared to restoring public confidence in the state as it implements the Tanzania National Vision 2025.

Early signs of slow but steady structural transformation in key sectors include the continued shift of labor from agriculture to services, and even to industry. Employment in agriculture declined from 71.4% of total employment in 2008 to 66.3% in 2018, while employment in industry increased to 7.1% from 5.7% and employment in services to 26.6% from 22.9%.

Key challenges in the medium and long term include low total factor productivity growth, a substantial infrastructure deficit, considerable poverty, and a skill mismatch in the labor market. Factor productivity is generally low, particularly in agriculture, where its growth averaged only 0.4% between 2015 and 2017. Tanzania lacks access to the development finance required to bridge the enormous infrastructure gap that comes with its size.

Poverty, inequality, and youth unemployment persist despite recent robust growth. Poverty declined, but at a slower pace of 6.4% between 2012 and 2018 than the 18.0% between 2007 and 2012. Youth unemployment increased from 5.7% in 2012 to 7.3% in 2016. In addition, enrollment in secondary education for young people ages 15–24 declined from 30.0% to 24.7%, calling into question the availability of skills for the job market.

Government policy improving the business and investment climate remains a work in progress, particularly in tax policy and administration, access to affordable finance, and government processes. The 2019 Global Competitiveness Report pointed to some key improvements in ICT adoption, macroeconomic stability, financial system, and business dynamism.

Last updated: April 2020