Tanzania

Economic Overview

The United Republic of Tanzania's economy is on a positive trajectory, characterized by steady growth, a renewed focus on attracting foreign investment, and strategic investments in infrastructure. Under the leadership of President Samia Suluhu Hassan, the government has made a significant pivot towards improving the business climate and mending international relations, positioning Tanzania as an increasingly attractive destination for foreign capital in East Africa. The 2025-2026 outlook is robust, driven by public investment, recovery in tourism, and progress on large-scale energy and transport projects.

GDP Size & Growth Trajectory

Tanzania's economy has demonstrated strong and consistent growth. Real GDP grew by an estimated 5.1% in 2023. This momentum is projected to accelerate, with the World Bank forecasting growth of 5.4% in 2025 and the African Development Bank (AfDB) projecting an even more robust 6.1% in 2025 and 6.3% in 2026.

This growth is underpinned by strong performance in the services sector, particularly tourism and transport, increased public investment in infrastructure, and reforms aimed at boosting private sector activity. The development of a major Liquefied Natural Gas (LNG) project and continued investment in the mining sector are expected to be key long-term growth drivers.

Sector Composition

Tanzania's economy is becoming increasingly diversified, with strong contributions from services, agriculture, and a growing industrial base.

• Services: This is the largest sector, contributing approximately 41% of GDP. It is driven by trade, transport, tourism, and financial services. The tourism sector, in particular, is a cornerstone of the economy and a major source of foreign exchange earnings.

• Agriculture: While its direct contribution to GDP is around 26%, the agriculture sector is fundamentally important, employing about 65% of the labor force. Key agricultural products include cashews, cotton, coffee, tea, and sisal. The sector has significant potential for increased productivity and commercialization.

• Industry and Construction: This sector accounts for about 29% of GDP, with construction being a major driver due to large-scale infrastructure projects. The mining sub-sector is also critically important, with Tanzania being a major producer of gold and other minerals like tanzanite.

Inflation Trends

The Bank of Tanzania has been successful in maintaining price stability. Inflation has remained within the central bank's medium-term target of 3-7%. Headline inflation stood at 3.0% in early 2024. The AfDB forecasts inflation to remain moderate, at 4.0% in 2025 and 4.2% in 2026, supported by prudent monetary policy and adequate domestic food supplies.

Fiscal & Monetary Policy Stance

• Monetary Policy: The Bank of Tanzania (BoT) has managed monetary policy effectively to control inflation while supporting growth. The BoT has recently transitioned to an interest rate-based monetary policy framework, using a Central Bank Rate to signal its policy stance, which enhances the transparency and effectiveness of monetary policy transmission.

• Fiscal Policy: The government is focused on expanding the tax base and improving the efficiency of public spending to support its ambitious infrastructure development agenda while maintaining fiscal sustainability. The fiscal deficit is projected to remain manageable.

Debt Sustainability Indicators

Tanzania's public debt remains at a low risk of distress. Total public debt was estimated at around 43% of GDP in 2023. The government's borrowing strategy has been prudent, relying heavily on concessional and semi-concessional loans to finance its development projects. This has kept debt service costs manageable and ensured long-term debt sustainability.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

Tanzania's large and youthful population provides a strong foundation for a growing consumer market.

Population Size and Demographics

With a population of over 69 million, Tanzania is one of the most populous countries in East Africa. The demographic profile is very young, with a median age of around 18 years, ensuring a growing workforce and consumer base for the foreseeable future.

Urbanization and Consumer Hubs

The country is steadily urbanizing, with about 37% of the population living in cities. Dar es Salaam, the former capital and largest city, is the country's primary commercial hub and one of the fastest-growing cities in Africa. Other important urban centers include the capital city of Dodoma, Mwanza, and Arusha.

Consumer Spending & Market Access

Consumer spending is driven by the growing urban population. While spending is still focused on basic necessities, a nascent middle class is emerging with an appetite for consumer goods, modern retail experiences, and digital services. The rapid adoption of mobile money platforms is facilitating digital commerce and improving market access.

Business Environment

Under President Hassan's administration, there has been a marked improvement in the business environment, with a clear policy shift towards encouraging private investment.

Ease of Doing Business & Regulatory Reforms

The government has actively worked to dismantle bureaucratic hurdles and improve the investment climate. President Hassan has personally championed the cause, directing ministries to be more responsive to investor needs and to create a more predictable and transparent regulatory environment. The Tanzania Investment Centre (TIC) serves as the primary agency for investment promotion, registration, and facilitation.

Company Registration Process

The registration of companies is managed by the Business Registrations and Licensing Agency (BRELA). The process has been simplified and can be initiated online. It involves name reservation, submission of incorporation documents, and payment of fees, leading to the issuance of a Certificate of Incorporation.

Tax Regime

• Corporate Income Tax (CIT): The standard rate is 30%.
• Value Added Tax (VAT): The standard VAT rate is 18%.

The government provides a range of attractive incentives for investments facilitated through the TIC, especially for "strategic investor" status projects. These can include exemptions from VAT on capital goods, reduced land rents, and other fiscal benefits.

Political Stability & Governance

Tanzania has long been regarded as an anchor of stability in the Great Lakes region.

Political Environment

Tanzania is a unitary republic with a multi-party democratic system. The ruling party, Chama Cha Mapinduzi (CCM), has been in power since independence, providing a high degree of policy continuity. After a period of political restriction, President Hassan has overseen a notable political opening, lifting a ban on opposition rallies and engaging in dialogue with political opponents. This has reduced political tensions and improved the country's democratic credentials.

Rule of Law & Investor Protection

The legal system is based on English Common Law. The government's recent policy shift has been accompanied by a renewed commitment to upholding the rule of law and protecting investor rights. The country is a signatory to international investment protection treaties, and the legal framework allows for international arbitration of disputes.

Infrastructure Readiness

Tanzania is making massive investments in infrastructure to leverage its strategic geographical position as a gateway for its landlocked neighbors.

Transport: The Central Corridor

The Central Corridor is a vital transport route connecting the Port of Dar es Salaam to the landlocked countries of Uganda, Rwanda, Burundi, and the eastern DR Congo.

• Port of Dar es Salaam: This is the country's principal port and a major regional logistics hub. The government is implementing a major expansion and modernization project (the Dar es Salaam Maritime Gateway Program) to increase efficiency, add new berths, and deepen the entrance channel to accommodate larger vessels.
• Standard Gauge Railway (SGR): This is Tanzania's flagship infrastructure project. It involves the construction of a modern SGR line from Dar es Salaam to the inland city of Mwanza on Lake Victoria, and further on to neighboring countries. The railway will dramatically reduce transit times and costs for both cargo and passengers along the Central Corridor.

Energy Sector

Tanzania is pursuing an ambitious energy development plan to meet its growing demand and power industrialization.

• Natural Gas: Tanzania has vast offshore natural gas reserves, estimated at over 57 trillion cubic feet. The government is in advanced negotiations with a consortium of international oil companies to develop a major Liquefied Natural Gas (LNG) plant in Lindi. This multi-billion dollar project would be one of the largest investments in the country's history.
• Hydropower: The Julius Nyerere Hydropower Station (Stiegler's Gorge), currently under construction on the Rufiji River, is another mega-project. Once completed, it will have an installed capacity of 2,115 MW, more than doubling the country's current generation capacity and providing a huge surplus of affordable electricity.

Sector-Specific Opportunities

1. Transport and Logistics

Given its strategic location and massive investment in port and rail infrastructure, the logistics sector presents enormous opportunities. This includes warehousing, freight forwarding, trucking services, and cold chain logistics, particularly to service the agricultural and mining sectors.

2. Tourism

As one of Africa's premier tourism destinations, Tanzania offers world-renowned attractions like the Serengeti National Park, Mount Kilimanjaro, the Ngorongoro Crater, and the islands of Zanzibar. Opportunities abound in developing new hotels and lodges (especially in the luxury and eco-tourism segments), tour operations, and related hospitality services.

3. Mining

Tanzania is rich in mineral resources, including gold, diamonds, nickel, and the unique gemstone, tanzanite. The government's improved relationship with the mining sector is renewing investor interest. There are opportunities not just in large-scale mining but also in providing services and equipment to the sector.

4. Natural Gas & Energy

The development of the LNG project will create a new pillar for the economy, with vast opportunities for service companies in engineering, construction, and technical support. The expected surplus of electricity from the Julius Nyerere hydropower project will also create opportunities for energy-intensive industries.

5. Agriculture and Agro-processing

With its large and fertile land, there is huge potential to move from subsistence farming to commercial agriculture. Key opportunities lie in the value addition and processing of key crops like cashews, coffee, and oilseeds for both domestic consumption and export.