Overview

  • Overview

    The East African nation of Tanzania has an estimated population of 50 million as of 2016. The country has maintained relatively stable, high growth over the last decade (averaging 6%–7% per annum). While the poverty rate has recently declined, the absolute number of the poor has not changed given the fast pace of population growth (over 3% per annum).  

    Political Context

    Political stability remains the cornerstone of Tanzania’s strong economic performance. In October 2015, John Pombe Magufuli, was elected the fifth President of the United Republic of Tanzania.  

    Economic Overview

    Overall for 2016, the Tanzanian economy has shown resilience amid flagging growth in Sub-Saharan Africa. Real GDP growth for the year is estimated at nearly 7% despite a softening of growth in the second half of the year. Agricultural production increased over the previous year. Non-manufacturing industrial growth softened as a whole as the substantial deceleration of construction and slump in the generation of electricity more than offset strong growth in the mining and quarrying sub-sector. Services maintained solid performance overall.

    The inflation rate has remained low and near the authorities’ medium-term target of 5%, although it has trended upward in recent months following a tightening of the food supply and rising energy costs. The current account deficit narrowed significantly in 2016 as exports grew modestly and imports fell significantly, especially for capital goods. Gross international reserves stood at $4.3 billion at the end of January 2017, a level sufficient to finance the equivalent of approximately four months of projected imports of goods services. The value of the shilling remained stable in 2016, following considerable volatility in 2015.

     

    The last completed budget (2015/16) saw significant overruns in recurrent spending and significant shortfalls in development spending, with the latter due to delays in securing funding. The fiscal deficit stood at 3.5% of GDP. The 2016/17 budget called for a fiscal deficit increase to accommodate higher levels of public investment and the clearance of verified arrears. However, the implementation of it up until December 2016 also experienced significant development underspending, largely explained by external financing shortfalls. Domestic revenue mobilization has been bolstered by strong measures to reduce tax exemptions and curb tax evasion and corruption.

    Social Context

    Though the poverty rate fell from 60% in 2007 to an estimated 47% in 2016, based on the $1.90 per day global poverty line, about 12 million Tanzanians still live in extreme poverty earning less than US$ 0.60 per day. Many hover just over the poverty line and risk falling back into poverty in the event of socio-economic shocks. Universal education, scrapping contributions for primary and secondary school, has drastically increased primary school enrolment.

    Development Challenges

    The prospects of the economy lean on investing in bottleneck-releasing infrastructure; improving the business environment; increasing agricultural productivity and value addition; improving service delivery to build a healthy and skilled workforce; and better managing urbanization. With approximately 800,000 youth entering into labor force every year, nurturing a vibrant private sector to provide productive jobs to those new to the labor market is critically important.

    Tanzania embarked upon its second Five Year Development Plan 2016/17 to 2020/21 (FYDP II), which, among other things, picks up interventions which fell short under MKUKUTA II and FYDP I. With its implementation based on a credible and realistic financing plan, the country’s fiscal and debt sustainability will be maintained. The private sector can also be leveraged, not only as a source of financing FYDP II through public private partnerships (PPPs), but also as the actual driver of industrialization.

    Last Updated: Apr 20, 2017

  • World Bank Group Engagement in Tanzania

    The World Bank Group’s (WBG) the Country Assistance Strategy (2012-2015) is aligned with Tanzania’s National Strategy for Growth and Poverty Reduction and focuses on four strategic objectives: to promote inclusive and sustainable private sector-led growth; build infrastructure and deliver services; strengthen human capital and safety nets; and promoting promote accountability and governance as a crosscutting objective.

    The current IDA portfolio in Tanzania comprises 24 IDA projects, including five Program for Results (P4Rs) operations, for a total net commitment amount of $4.1 billion. Key sectors include: transport (29%), urban (21%), energy (13%), social protection (9%) and education (7%). Tanzania also participates in seven regional projects (worth $550 million) supporting the transport/ICT, energy, environment, health and education sectors.

    International Finance Corporation (IFC)

    IFC’s strategy in Tanzania involves proactively developing infrastructure projects through investment and advisory (Public–Private Partnerships) intervention, focusing on power, oil, and transportation. The IFC will also work closely with IDA to promote the more rapid commercialization of agriculture. The IFC’s strategy places an emphasis on strengthening financial markets, particularly in terms of access to finance for MSMEs. It is looking to forging partnerships with local banks, supporting its initiatives in the financial sector with local currency financing, as well as developing products to support the microfinance, SME, and housing sectors. The IFC seeks to provide advisory services to improve the investment climate through reform programs that cover licensing, regulatory reform, and other areas tracked in the Doing Business indicators.

    Knowledge Products

    The Bank’s knowledge work has informed government-led reforms and helped to design programs and projects. Recent analytical works include poverty assessment, economic update pension reform, sanitation, Islamic banking, finance leasing and climate change. The Tanzania economic updates have focused on select topics: productive jobs, unlocking the potential of the tourism industry, improving tax performance, and leveraging public private partnerships to finance development.

    Last Updated: Apr 20, 2017

  • The World Bank Group (WBG) financing has contributed to Tanzania’s development performance in a number of areas, including:

    Improving Infrastructure and Delivery of Services

    Tanzania has been able to improve its national road network with the construction of more than 2,400 km of paved roads and 3,100 km gravel roads, and the heavy maintenance of more than 4,900 km of roads over the past 20 years. These works were done through six highway programs, two integrated road projects, two corridor transport projects and one transport sector support project. Currently, the percentage of roads in good and fair conditions as a percentage of total classified roads stands at 86%. These projects/programs have not only provided funds for the road works but they have generated institutional support as well as policy and strategy development and reforms needed to ensure the sustainability of benefits from these investments. 

    The gas pipeline from Songo Songo in southern Tanzania to Dar es Salaam has attained the capacity to deliver 65 million cubic feet of gas for power generation. The WBG has also spearheaded the scaling up of the transmission capacity with a 400kV double circuit backbone transmission line capable of transmitting 2,000MW between Iringa and Shinyanga.

    Support to Tanzania’s Water Sector Development Program (2007-2016) has seen an increase of 78% in the number of rural water collection points from 44,738 points when the project started in 2007 to 77,584 points in June 2014. A total of 32,846 additional rural water points were built/rehabilitated against a target of 41,900 points for this phase. On its urban component, the program has facilitated the connection of 236,541 customers and built 549 water collection points which by June 2014 had enabled 2.7 million urban residents to access clean and safe water.

    Strengthening Human Capital

    Important strides have also been made in the secondary education sector with 4,708 classrooms built under the Secondary Education Development Program (SEDP II) and 2,536 new degree-holding teachers hired to teach. The implementation of the Tanzania Social Action Fund (TASAF I & II) and the Productive Social Safety Nets (PSSN) project have helped to put in place the building blocks for a comprehensive safety nets system targeting the extreme poor. Community Driven Development (CDD) interventions implemented under this program have benefited 25.9 million. The current safety net program directly supports over 6 million beneficiaries (all living below food poverty line in Tanzania) through Conditional Cash Transfers, Public Works and Livelihood interventions.

    WBG support to agriculture also directly contributed to the achievement of self-sufficiency in basic grains production (rice and maize) thereby contributing to lower food prices benefitting a large proportion of the poorer population. Maize yields increased by 27% in areas where the WBG provided support, while irrigation investments contributed to 48% increase in the total irrigated area.  

    Last Updated: Apr 20, 2017

  • Nearly $2.6 billion was disbursed to Tanzania between 2014 and 2015, of which the International Development Association (IDA) is the largest financier, providing an average of 23%, followed by the United States of America 17.7%, the United Kingdom 10.3%, the African Development Bank 7.3 % and the Global Fund 6.3%. The World Bank Group is an active player in the Development Partners Group, which was established in 2004 to strengthen development partnership and effectiveness of development cooperation. It also co-chairs the Public Expenditure Review, a joint Government-development partner platform for dialogue around fiscal policy and expenditure management.    

    Last Updated: Apr 20, 2017

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LENDING

Tanzania: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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In Depth

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Africa's Pulse, No. 15, April 2017

Economic growth in Sub-Saharan Africa is projected to recover to 2.6 percent in 2017, following a marked deceleration in 2016.

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International Development Association (IDA) in Africa

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

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World Bank Africa Multimedia

Watch, listen and click through the latest videos, podcasts and slideshows highlighting the World Bank’s work in Sub-Saharan Africa.

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Doing Business in Tanzania

The Doing Business Project provides objective measures of business regulations and their enforcement. See where Tanzania ranks on the "...

Additional Resources

Country Office Contacts

Main Office Contact
+255-22-216-3200

Loy Nabeta
Communications Officer 
+255-22-216-3246
50 Mirambo Street
P. O. Box 2054
Dar es Salaam
lnabeta@worldbank.org
In Washington:
Preeti Arora
Country Program Coordinator
+1-202-458-4097
1818 H Street NW
Washington DC 20433
USA
parora@worldbank.org