Economy of Tanzania

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Economy of Tanzania

Dar es Salaam, the financial centre of Tanzania

Currency Tanzanian shilling (TSh)

Fiscal year 1 July – 30 June

Trade AU, AfCFTA (signed), EAC, SADC, WTO
organisations

Country group Developing/Emerging[1]

Lower-middle income economy[2]

Statistics

Population  58,552,845 (2020 est.)[3][note 1]

GDP  $62.224 billion (nominal, 2019 est.)[4]

 $193.504 billion (PPP, 2019 est.)[5]

GDP rank 74th (nominal, 2019)

66th (PPP, 2020)

GDP growth 5.4% (2018) 5.8% (2019e)

2.5% (2020f) 5.5% (2021f)[6]
GDP per capita  $1,105 (nominal, 2019 est.)[4]

 $3,402 (PPP, 2019 est.)[4]

GDP per capita 158th (nominal, 2019)
rank
154th (PPP, 2019)
GDP by sector agriculture: 23.4%

industry: 28.6%

services: 47.6%

(2017 est.)[3]
Inflation (CPI) 3.9% (2020 est.)[5]
Base borrowing 12% (2014)[7]
rate
Population 26.4% (2018)[8]
below poverty line
76.6% on less than $3.20/day (2017)[9]
Gini coefficient 40.5 medium (2017)[10]
Human  0.528 low (2018)[11] (159th)
Development
 0.397 low IHDI (2018)[12]
Index
Labour force  27,170,626 (2019)[13]

 82.2% employment rate (2014)[14]

Labour force by Agriculture: 50%[15]: page 56 
occupation

Unemployment 2.2% (2017)[16]

Main industries agricultural processing (sugar, beer, cigarettes, sisal twine);

mining (diamonds, gold, and iron), salt, soda ash; cement, oil

refining, shoes, apparel, wood products, fertilizer[3]

Ease-of-doing-  141st (medium, 2020)[17]
business rank

External

Exports  $5.6685 billion (105th; October 2015)[18]

Export goods gold, tobacco, cashews, sesame seeds, refined petroleum
Main export  India 20%
partners
 United Arab Emirates 13%

 China 8%

 Switzerland 7%
 Rwanda 6%

 Kenya 5%

 Vietnam 5% (2019)[19]

Imports  $10.441 billion (FOB; October 2015)[18]

Import goods refined petroleum, palm oil, packaged medicines, cars, wheat
Main import  China 34%
partners
 India 15%
  United Arab Emirates 12% (2019)[19]
FDI stock $12.715 billion (2013)[20]
Current account –4.002 billion (October 2015)[18]
Gross external $15.4 billion (October 2015)[18]
debt

Public finances
Public debt  37% of GDP (2017 est.)[3]
Budget balance –1.8% (of GDP) (2017 est.)[3]

Revenues $12.88 billion (2022 est.)

Expenses $14.91 billion (2022 est.)

Economic aid $490 million (recipient; 2014)[21]

Credit rating n/a (TBD)
Foreign reserves $4,383.6 million (4.5 months of imports; 2013)[18]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Tanzania is a lower-middle income economy[22][23] that is

overwhelmingly dependent on agriculture.[24] Tanzania's economy has been transitioning
from a command economy to a market economy since 1985. Although total GDP has
increased since these reforms began, GDP per capita dropped sharply at first, and only
exceeded the pre-transition figure in around 2007. [25]
Following the rebasing of the economy in 2014, the GDP increased by a third to $41.33
billion.[26]
In 2020, the real GDP of Tanzania grew by 4.8% reaching US$64.4 billion versus
US$60.8 billion in 2019. This growth made it the 2nd largest economy in East
Africa after Kenya, and the 7th largest in Sub-Saharan Africa.[27]
It has sustained relatively high economic growth compared to global trends, as is
characteristic of African nations. It is worth noting that according to World Bank data,
the last 5 years have seen the slowest growth since 2000. The medium-term outlook is
so far positive, with growth projected at 6 percent in 2020/21, which is supported by
large infrastructure spending.[28][29]
The World Bank (WB) expects the economic growth of Tanzania to slow to 2.5% in
2020[30] due to the Covid-19 pandemic which has affected the labor market, the
production capacity, and productivity. Tourism has halted, and exports of manufacturing
and agricultural goods slumped.
On 7 September 2021, the IMF approved US$567.25 million in emergency financial
assistance to support Tanzania’s efforts in responding to the Covid-19 pandemic [31] by
addressing the urgent health, humanitarian, and economic costs.
The IMF projects a GDP growth for Tanzania of +4.0% and +5.1% in 2021 and 2022,
[32]
 and 6.0% in 2026.
 However, the AfDB estimates that Tanzania’s GDP will grow by 2.8% in 2021, [33] and
projecting a strong rebound for 2022 and 2023 with 4.9% and 6.3% economic growth
respectively.

Contents

 1History
 2Macro-economic trend
 3Agriculture
 4Industry
o 4.1Mining
 4.1.1Minerals
o 4.2Electricity
o 4.3Natural gas
 5External trade and investment
 6Zanzibar
 7Literature
 8See also
 9References
 10Notes
 11External links

History[edit]
Significant measures have been taken to liberalize the Tanzanian economy along
market lines and encourage both foreign and domestic private investment. Beginning in
1986, the Government of Tanzania embarked on an adjustment program to dismantle
the socialist (Ujamaa) economic controls and encourage more active participation of
the private sector in the economy. The program included a comprehensive package of
policies which reduced the budget deficit and improved monetary control, substantially
depreciated the overvalued exchange rate, liberalized the trade regime, removed most
price controls, eased restrictions on the marketing of food crops, freed interest rates,
and initiated a restructuring of the financial sector.
Current GDP per capita of Tanzania grew more than 40 percent between 1998 and
2007.[34] In May 2009, the International Monetary Fund (IMF) approved an Exogenous
Shock Facility for Tanzania to help the country cope with the global economic
crisis[35] Tanzania is also engaged in a Policy Support Instrument (PSI) with the IMF,
which commenced in February 2007 after Tanzania completed its second three-
year Poverty Reduction and Growth Facility (PRGF), the first having been completed in
August 2003. The PRGF was the successor program to the Enhanced Structural
Adjustment Facility, which Tanzania also participated in from 1996 to 1999. The IMF's
PSI program provides policy support and signaling to participating low-income countries
and is intended for countries that have usually achieved a reasonable growth
performance, low underlying inflation, an adequate level of official international
reserves, and have begun to establish external and net domestic debt sustainability.
Tanzania also embarked on a major restructuring of state-owned enterprises. The
program has so far divested 335 out of some 425 parastatal entities. Overall, real
economic growth has averaged about 4 percent a year, much better than the previous
20 years, but not enough to improve the lives of average Tanzanians. Also, the
economy remains overwhelmingly donor-dependent. Moreover, Tanzania has an
external debt of $7.9 billion. The servicing of this debt absorbs about 40 percent of total
government expenditures. Tanzania has qualified for debt relief under the
enhanced Heavily Indebted Poor Countries (HIPC) initiative. Debts worth over $6 billion
were canceled following implementation of the Paris Club 7 Agreement. Height measure
studies for Tanzania show that welfare increased through the years of colonization, with
a decline during the 1930s, due to epidemics in that period. [36]

Macro-economic trend[edit]

Historical development of real GDP per capita in Tanzania, since 1950

This is a chart of trend of gross domestic product of Tanzania at market prices

estimated by the International Monetary Fund with figures in millions of shillings.[37][38]

Year Gross Domestic Product US Dollar Exchange

1980 45,749 8/21

1985 115,006 17/87

1990 830,693 195/04

1995 3,020,501 536/40

2000 7,267,133 800/43

2005 13,713,477 1,127/10

2010 – 1,515/10

Mean wages were $0.52 per man-hour in 2009.[citation needed] The economy saw continuous
real GDP growth of at least 5% since 2007.
The following table shows the main economic indicators in 1980–2017. Inflation below
5% is in green.[39]

Year GDP GDP per capita GDP growth Inflation rate Government debt
(in bil. US$ PPP) (in US$ PPP) (real) (in Percent) (in % of GDP)

1980 11.0 592 3.3% 30.2% n/a

1981 12.1 633 0.5% 25.7% n/a

1982 13.0 657 0.6% 28.9% n/a

1983 13.8 680 2.4% 27.1% n/a

1984 14.8 708 3.4% 36.1% n/a

1985 15.9 744 4.6% 33.3% n/a

1986 17.3 789 6.6% 32.4% n/a

1987 18.8 835 5.9% 29.9% n/a

1988 20.3 880 4.4% 31.2% n/a

1989 21.9 917 3.8% 25.8% n/a

1990 24.3 985 7.0% 36.4% n/a

1991 25.7 1,007 2.1% 25.2% n/a

1992 26.4 1,004 0.6% 20.7% n/a

1993 27.4 1,009 1.2% 26.1% n/a

1994 28.4 1,016 1.6% 37.9% n/a

1995 30.0 1,044 3.6% 26.8% n/a

1996 32.0 1,081 4.5% 21.0% n/a

1997 33.7 1,108 3.5% 16.1% n/a

1998 35.3 1,132 3.7% 12.8% n/a

1999 37.6 1,174 4.8% 7.9% n/a

2000 40.3 1,228 4.9% 6.0% n/a

2001 43.7 1,298 6.0% 5.1% 50.2%

2002 47.4 1,377 6.9% 4.6% 47.0%

2003 51.4 1,447 6.4% 4.4% 44.3%

2004 56.6 1,548 7.2% 4.1% 44.6%

2005 62.1 1,651 6.5% 4.4% 46.8%

2006 66.9 1,732 4.7% 7.3% 32.8%

2007 74.6 1,879 8.5% 7.0% 21.6%

2008 80.2 1,970 5.6% 10.3% 21.5%

2009 85.2 2,039 5.4% 12.1% 24.4%

2010 91.7 2,140 6.4% 7.2% 27.3%

2011 101.0 2,301 7.9% 12.7% 27.8%

2012 108.2 2,409 5.1% 16.0% 29.2%

2013 118.1 2,577 7.2% 7.9% 30.9%

2014 128.7 2,754 7.0% 6.1% 33.8%

2015 139.1 2,918 7.0% 5.6% 37.2%

2016 150.4 3,091 7.0% 5.2% 38.0%

2017 162.5 3,247 6.0% 5.3% 37.0%

Agriculture[edit]
Main article: Agriculture in Tanzania
Farmers clearing a rice field manually using their hands.

The Tanzanian economy is heavily based on agriculture, which accounts for 28.7
percent of gross domestic product,[15]: page 37  provides 85 percent of exports,[40] and accounts
for half of the employed workforce;[15]: page 56  The agricultural sector grew 4.3 percent in
2012, less than half of the Millennium Development Goal target of 10.8 percent.[41] 16.4
percent of the land is arable,[42] with 2.4 percent of the land planted with permanent
crops.[43]
This strong dependence on agriculture, makes Tanzania's economy highly vulnerable to
weather shocks and fluctuating commodity prices. 76% of Tanzania's population subsist
thanks to agriculture and, due to the lack of knowledge and infrastructure to develop
and implement some kind of agricultural technology, any droughts, floods, or
temperature shocks can severely damage the living standards of those people and
create huge increases in unemployment, hunger, and malnutrition rates, as well as, in
really severe case, mortality rates due to starvation.[44]
Tanzania produced in 2018:

 5.9 million tons of maize;

 5 million tons of cassava (12th largest producer in the world);
 3.8 million tons of sweet potato (4th largest producer in the world, second only to
China, Malawi and Nigeria);
 3.4 million tons of banana (10th largest producer in the world, 13th
adding plantain production);
 3 million tons of rice;
 3 million tons of sugarcane;
 1.7 million tons of potato;
 1.2 million tons of beans (6th largest producer in the world);
 940 thousand tons of peanut (7th largest producer in the world);
 930 thousand tons of sunflower seed (12th largest producer in the world);
 808 thousand tons of sorghum;
 561 thousand tons of sesame seed (5th largest producer in the world, losing only to
Sudan, Myanmar, India and Nigeria);
 546 thousand tons of coconut (11th largest producer in the world);
 454 thousand tons of mango (including mangosteen and guava);
 389 thousand tons of pineapple;
 373 thousand tons of orange;
 356 thousand tons of tomato;
 238 thousand tons of cotton;
 171 thousand tons of cashew nuts (6th largest producer in the world);
In addition to smaller productions of other agricultural products, like tobacco (107
thousand tons, 8th largest producer in the world), coffee (55 thousand tons), tea (36
thousand tons) and sisal (33 thousand tons).[45]

Industry[edit]
Industries are a major and growing component of the Tanzanian economy, contributing
22.2 percent of GDP in 2013.[15]: page 37  This component includes mining and quarrying,
manufacturing, electricity and natural gas, water supply, and construction. [15]: page 37 
Mining[edit]
Main article: Mining industry of Tanzania
Mining contributed 3.3 percent of GDP in 2013.[15]: page 33  The vast majority of the country's
mineral export revenue comes from gold, accounting for 89 percent of the value of
those exports in 2013.[15]: page 71  It also exports sizable quantities of gemstones,
including diamonds and tanzanite.[46]: page 1250  All of Tanzania's coal production, which
totalled 106,000 short tons in 2012, is used domestically. [47]
Minerals[edit]
Other minerals exploited in Tanzania include;

1. Pozzolana
2. Salt
3. Gypsum
4. Kaolinite
5. Silver ore
6. Copper
7. Phosphate
8. Tanzanite
9. Tin
10. Graphite
11. Bauxite.[15]: pages 70–71 
Modern gold mining in Tanzania started in the German colonial period, beginning with
gold discoveries near Lake Victoria in 1894. The first gold mine in what was
then Tanganyika, the Sekenke Gold Mine, began operation in 1909, and gold mining in
Tanzania experienced a boom between 1930 and World War II. By 1967, gold
production in the country had dropped to insignificance but was revived in the mid-
1970s, when the gold price rose once more. In the late 1990s, foreign mining
companies started investing in the exploration and development of gold deposits in
Tanzania, leading to the opening of a number of new mines, like the Golden Pride mine,
which opened in 1999 as the first modern gold mine in the country, or the Buzwagi
mine, which opened in 2009.[48][49]
Buzwagi Gold Mine

Nickel reserves amounting to 290,000 tonnes were discovered in October 2012 by

Ngwena Company Limited, a subsidiary of the Australian mining company IMX
Resources. An initial investment of around USD $38 million has been made since
exploration began in 2006, and nickel should start being mined at the end of 2015. [50]
Chinese firms have been showing major interest in Tanzania's mineral deposits; an
announcement was made in late 2011 of a plan by the Sichuan Hongda Group, to
invest about US$3 billion to develop the Mchuchuma coal and Liganga iron ore projects
in the south of the country.[51] It was also announced in August 2012 that China National
Gold Corp are in talks to purchase mining assets in Tanzania from African Barrick Gold,
in a deal that could be worth more than £2 billion stg.[51]
In November 2012, the Tanzanian government announced investigations into
allegations that mining investors in the country were harassing and on some occasions,
killing residents around mining sites.[52]
Electricity[edit]
The government-owned Tanzania Electric Supply Company Limited (TANESCO)
dominates the electric supply industry in Tanzania. [53] The country generated 6.013
billion kilowatt hours (kWh) of electricity in 2013, a 4.2 percent increase over the 5.771
billion kWh generated in 2012.[54]: page 4  Generation increased by 63 percent between 2005
and 2012;[55][56] however, only 15 percent of Tanzanians had access to electric power in
2011.[57] Almost 18 percent of the electricity generated in 2012 was lost because of theft
and transmission and distribution problems.[55] The electrical supply varies, particularly
when droughts disrupt hydropower electric generation; rolling blackouts are
implemented as necessary.[46]: page 1251 [53] The unreliability of the electrical supply has
hindered the development of Tanzanian industry. [46]: page 1251  In 2013, 49.7 percent of
Tanzania's electricity generation came from natural gas, 28.9 percent from hydroelectric
sources, 20.4 percent from thermal sources, and 1.0 percent from outside the country. [54]: 
page 5 
 The government is building a 532 kilometres (331 mi) gas pipeline from Mnazi
Bay to Dar es Salaam, with a scheduled completion in 2015. [58] This pipeline is expected
to allow the country to double its electricity generation capacity to 3,000 megawatts by
2016.[59] The government's goal is to increase capacity to at least 10,000 megawatts by
2025.[60]
Natural gas[edit]
Songo Songo Gas Plant

According to PFC Energy, 25 to 30 trillion cubic feet of recoverable natural gas

resources have been discovered in Tanzania since 2010. [47] The value of natural gas
actually produced in 2013 was US$52.2 million, a 42.7 percent increase over 2012. [15]: page
73 

Commercial production of gas from the Songo Songo Island field in the Indian Ocean
commenced in 2004, thirty years after it was discovered there. [61][62] Over 35 billion cubic
feet of gas was produced from this field in 2013, [15]: page 72  with proven, probable, and
possible reserves totalling 1.1 trillion cubic feet. [62] The gas is transported by pipeline to
Dar es Salaam.[61] As of 27 August 2014, TANESCO owed the operator of this field, Orca
Exploration Group Inc., US$50.4 million, down from US$63.8 million two months earlier.
[63]

A newer natural gas field in Mnazi Bay in 2013 produced about one-seventh of the
amount produced near Songo Songo Island [15]: page 73  but has proven, probable, and
possible reserves of 2.2 trillion cubic feet. [62] Virtually all of that gas is being used for
electricity generation in Mtwara.[61]
The Indian Ocean, off the coast of Mozambique and Tanzania, is proving to be a rich
hunting ground for natural gas exploration. According to US Geological
Survey estimates, the combined gas reserves of Mozambique and Tanzania could be
as high as 250 trillion cubic feet. In Mozambique alone, proven gas reserves have
increased dramatically from a mere 4.6 trillion cubic feet in 2013 to 98.8 trillion cubic
feet as of mid-2015. Given continued offshore discoveries and the size of discoveries to
date, continued growth in proven gas reserves is likely to continue into the foreseeable
future.[64][65]
New exploration on more frontier blocks, however, will likely be slowed as oil and gas
prices fall[66] and companies apply increasing caution to investing in frontier markets with
nascent industries, poor infrastructure and long lead times. [67]

External trade and investment[edit]

Tanzanian exports in 2006

Tanzania's history of political stability has encouraged foreign direct investment. The
government has committed itself to improve the investment climate including redrawing
tax codes, floating the exchange rate, licensing foreign banks, and creating an
investment promotion centre to cut red tape. Its economy is currently being managed
according to the Tanzania Mini-Tiger Plan. Tanzania has mineral resources and a
largely untapped tourism sector, which might make it a viable market for foreign
investment.
The stock market capitalisation of listed companies in Tanzania was valued at $588
million in 2005 by the World Bank.[68]

Zanzibar[edit]
Zanzibar's economy is based primarily on the production of cloves (90% grown on the
island of Pemba), the principal foreign exchange earner. Exports have suffered from the
downturn in the clove market.
The Government of Zanzibar has been more aggressive than its mainland counterpart
in instituting economic reforms and has legalized foreign exchange bureaus on the
islands. This has loosened up the economy and dramatically increased the availability
of consumer commodities. Furthermore, with external funding, the government plans to
make the port of Zanzibar a free port. Rehabilitation of current port facilities and plans to
extend these facilities will be the precursor to the free port. The island's manufacturing
sector is limited mainly to import substitution industries, such as cigarettes, shoes, and
process agricultural products. In 1992, the government designated two export-producing
zones and encouraged the development of offshore financial services. Zanzibar still
imports much of its staple requirements, petroleum products, and manufactured articles.

Literature[edit]
 Paul Collier: Labour and Poverty in Rural Tanzania. Ujamaa and Rural Development
in the United Republic of Tanzania. Oxford University Press, New York
1991, ISBN 0-19-828315-6.

See also[edit]
 Tanzania and the World Bank
 List of regions of Tanzania by GDP
 List of companies of Tanzania
 Taxation in Tanzania
 Child labour in Tanzania
 Microfinance in Tanzania
 Poverty in Tanzania
 Economy of Africa
 United Nations Economic Commission for Africa